Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — HEALTH

The Secretary of State was asked—

Midwives

Mr. Huw Edwards: If he will make a statement about the grading of qualified midwives. [57349]

The Minister of State, Department of Health (Mr. Alan Milburn): The great majority of midwives are graded E to G and will earn salaries up to £22,255 from 1 December 1998.

Mr. Edwards: Will my right hon. Friend join me in applauding the excellent work of midwives, such as those whom I met at Nevill Hall hospital last Friday? Will he work with his Welsh Office colleagues to ensure that midwives working in trusts in Wales receive as a minimum the F grade recommended in England?

Mr. Milburn: Yes, I join my hon. Friend in recognising the invaluable work performed by midwives in the NHS. The Government accepted last year's pay review body recommendations, which urged us to reflect any changes in midwives' roles and responsibilities in the appropriate grade and pay. That message has been communicated directly to all NHS trusts. We expect each and every trust to take that issue seriously but, equally, we expect them to ensure that grading reflects real responsibilities and clinical expertise.

Mr. Simon Hughes: Given that no Minister was willing to come over to Westminster Central hall three weeks ago to face the 1,000 midwives— [Interruption.] That is quite true. The midwives were clear that a few of them had a meeting in private at the Department, but Ministers were not willing to meet the rally in Westminster Central hall. Given that there is clearly a huge crisis in staffing and morale not just among midwives, but among nurses and other health workers, how much of the £21 billion announced in July will be used to improve the pay and conditions of midwives, nurses and health workers? It is no good modernising equipment and buildings in the NHS without modernising pay and conditions, and paying any salary increase in one go rather than in stages.

Mr. Milburn: The hon. Gentleman has made two foolish points. First, my right hon. Friend the Minister for

Public Health did meet midwives on the day that they lobbied Parliament and, in addition, my noble Friend Baroness Hayman met the leader of the Royal College of Midwives. Secondly, the hon. Gentleman will know as well as I do that the process for determining pay and conditions for midwives and nurses is governed by an independent pay review body, and its work is now under way. As I understand it, all parties in the House subscribe to that process, as do nurses and midwives. We have submitted our evidence, and the midwives and nursing trade unions have submitted theirs. Our evidence makes it clear that we want to see a fair pay rise for all nurses and midwives which is affordable to the NHS. In particular, we want to see progress on the starting rate of pay for nurses. If we are to do that and to end staging, as we want to, the review body must come up with recommendations that allow the NHS to live within its means.

Ambulance Service

Mrs. Helen Brinton: If he will make a statement on the Government's plans for the ambulance service. [57350]

The Parliamentary Under-Secretary of State for Health (Mr. John Hutton): We are committed to modernising the NHS and improving services to patients, including ambulance services. Our plans include achieving faster and more appropriate response times for patients, including wider use of call prioritisation.

Mrs. Brinton: Is my hon. Friend aware of the grave concerns surrounding the performance of the East Anglian Ambulance NHS trust which serves my constituency and is currently under investigation by the regional health authority? Ambulance staff are frightened to speak out about what they know is wrong. Does my hon. Friend agree that the days of gagging clauses ended when the Labour Government were elected in 1997? Will my hon. Friend assure me that, under this Government, my constituents can rely on a top-quality ambulance service, and that all NHS staff will be respected as well as protected? [Interruption.] I do not find those desires funny.

Mr. Hutton: I can certainly give my hon. Friend the assurances that she seeks. As she will be aware, the Minister of State, Department of Health, my right hon. Friend the Member for Darlington (Mr. Milburn), has already written to chairmen of NHS trusts and health authorities on that issue. Confidentiality clauses discriminate against staff's rights and responsibilities to bring unacceptable practices into the open and there is no place for them in the NHS. NHS employers are expected to allow their staff maximum freedom of speech, consistent with their obligation to maintain patient confidentiality. I am sure that my hon. Friend will also be aware that the Public Interest Disclosure Act 1998, which will come into effect in January 1999, will, for the


first time, provide statutory protection for employees who are subject to a detriment as a result of blowing the whistle.

Mr. John Randall: Can the Minister assure the House that the Government will ensure that 999 ambulance calls are always responded to by blue-light ambulances?

Mr. Hutton: I am sure that the hon. Gentleman is aware of the Audit Commission's recent conclusions on that. It is sensible to answer life-threatening emergencies first. Matching resources to clinical needs will help us to improve emergency care. Call prioritisation is about when, not whether, to send an ambulance.

NHS (Development)

Mr. Paul Goggins: What steps he is taking to ensure that young people are consulted on the future development of the NHS. [57351]

The Minister for Public Health (Ms Tessa Jowell): The involvement of all who use the health service, young and old, is essential in rebuilding a public service that is open and accountable to the people whom it serves, shaped by their experience and responsive to their needs. That is why the voice of patients will be heard at every level, whether through primary care groups, the national institute for clinical excellence or the increased involvement of local people on trust boards. That involvement is part of building a national health service in which people have confidence— no longer one governed by a take-it-or-leave-it attitude, or where people are treated as numbers, but a partnership to build quality and responsiveness.

Mr. Goggins: I thank my right hon. Friend for that detailed and encouraging response. May I draw her attention to Manchester's healthy school initiative, under which 50 school children recently communicated their views about the national health service directly to managers and providers in south Manchester? Does she agree that such events are important in ensuring that young people have a say, and because they can lead to real improvements in the delivery of health care services?

Ms Jowell: I commend the initiative of my hon. Friend's health authority. It is part of the health action zone, and I hope that that example of the involvement of young people in developing the national health service is one which other health authorities will seek to copy.

Mr. John Wilkinson: Many young people would regard the Minister's response as totally at variance with their experience locally. There may be a consultation exercise for NHS development, but all too often it is a total charade. The wishes of thousands of people, including young people, appear to be ignored. What practical steps will the Minister take to ensure that their wishes are translated into action inasmuch as they pay for the health service and those in my constituency want to see their local hospital, Mount Vernon, built up rather than run down?

Ms Jowell: Perhaps one of the most important changes that has marked the past 18 months is that consultation in the NHS no longer means simply a period of time. The hon. Gentleman is absolutely right to say that, where a consultation is undertaken and the views expressed are completely disregarded, people's confidence in the process will begin to diminish. We regard consultation and the views of those who use the health service as essential to developing it, which is why, for the first time in the history of the NHS, we are now conducting a patient survey of about 100,000 people who are being asked about their views and experiences of the service. The feedback from that survey will be vital in assessing the performance of the health service against the national performance framework.
The hon. Gentleman had better accept that nothing effective happened to involve local people, young or old, under the previous Government. We are developing a programme of consultation and partnership with people who use the health service.

Mr. Barry Sheerman: Has my right hon. Friend considered communicating with young people, especially young women, through the medium of their magazines? A visit to any newsagent would show how many such magazines are published. Is she not disturbed when she analyses their contents? There may be a lot about breast enhancement surgery, but there is very little about the dangers of smoking or the causes of breast cancer and other cancers. Given that young women do not read newspapers, will my right hon. Friend use those magazines to get through to them?

Ms Jowell: My hon. Friend is absolutely right. That is why I have recently had two meetings with the editors of teenage magazines, at which we discussed young people and smoking, and young people and teenage pregnancy. He is right that, if we want young people to listen and to hear what we have to say, it is much better if the information comes from the magazines that they read and the people to whom they relate rather than from middle-aged Ministers.

Mr. Dafydd Wigley: In projecting to young people the future developments of the national health service, will the Minister bear in mind the need to project the attractiveness of NHS careers for nurses, dentists and doctors? Unless that is done more positively and the attractions are underlined more effectively, there is a danger that there will not be enough people to train for that important work.

Ms Jowell: That is absolutely right. My right hon. Friend the Minister of State recently launched a competition for school children specifically to awaken their interest in a career in the national health service. We must inspire young people with the prospects that a career in the NHS can offer. If any young people in the right hon. Gentleman's constituency would like to enter the competition, it is still open.

Beta-interferon

Mr. Harry Barnes: What representations he has received concerning the funding of beta— interferon; and if he will make a statement. [57352]

The Minister of State, Department of Health (Mr. Alan Milburn): In the past 18 months, the Department's records show that we received 177 written representations from Members of Parliament, patients' groups and the public about the prescribing and funding of beta-interferon. I also met representatives of the Multiple Sclerosis Society in May.
Most health authorities now have procedures in place by which patients can receive treatment with beta-interferon. More generally, the Government want greater consistency in the delivery of cost-effective clinical services to patients, wherever they live.

Mr. Barnes: Is the Minister aware that many MS patients in North Derbyshire have been prescribed beta-interferon, but have been lucky enough to receive it only if they are in the top eight on the list for treatment; have successfully pursued a court case, as one of my constituents has; or have decided to go private until the money runs out, such as Lesley Coombes of Ashover? Reassessments have been made to take off the list between 40 and 50 people who had hoped to receive beta-interferon. Is there not a case for earmarked resources for such authorities as North Derbyshire so that it can handle that massive problem?

Mr. Milburn: I would be very glad to look into the individual case that my hon. Friend has highlighted, and I hope that North Derbyshire health authority feels in a rather more comfortable financial position as a result of today's extra allocation of resources. The extra £ 13.9 million that my hon. Friend's health authority will receive next year represents a cash increase of 6.6 per cent.
I know that my hon. Friend has not done so, but it is terribly important that no one raises any false expectations about the ability of beta-interferon or any other drug to combat an extremely debilitating and distressing condition. Beta-interferon is not a cure for multiple sclerosis; there is no cure for it. The evidence seems to suggest that some patients with a particular form of the disease can benefit briefly from the use of beta-interferon. Sadly, the evidence also suggests that those short-term improvements are not always sustained. The Department will be commissioning new research into the appropriate usage of beta-interferon, and we will be issuing new guidelines before too long to ensure greater national consistency in the uptake of the drug.

Mrs. Marion Roe: Given the inconsistent availability of beta-interferon, does the right hon. Gentleman continue to believe that there is no such thing as rationing in the national health service?

Mr. Milburn: Opposition Members are in terrible danger of fermenting a crisis on this issue in the national health service. It is important to remember that for the vast majority of patients, in the vast majority of places, for the vast majority of the time, the vast majority of treatments are available on the national health service. Under this Government they will continue to be available on the NHS.

Mr. Alan Simpson: I know that the Minister is aware of the work on beta-interferon by Professor Blumhardt in Nottingham. I understand that

the prism trials have now been published in The Lancet. I support the argument for earmarking funds, but will my right hon. Friend's assessment take account of the study in The Lancet? Will he introduce consistency to the prescribing process in decisions about whether beta-interferon is appropriate for MS sufferers?

Mr. Milburn: I can give my hon. Friend that assurance. The products currently on the market are for a particular form of MS— the relapsing, remitting form— whereas the article in The Lancet is about the more serious, progressive form. The product to which my hon. Friend referred has not yet been licensed through the European procedures, let alone in this country. It is our intention to examine all beta-interferon products to achieve the greater national consistency in prescribing that all right hon. and hon. Members want.

Mr. Alan Duncan: First, may I welcome the Under-Secretary of State for Health, the hon. Member for Barrow and Furness (Mr. Hutton) to the Dispatch Box for the first time? He has important responsibilities, and I assure him that we have every intention of keeping him as busy as possible.
Many people will question the Minister's answer to his hon. Friend the Member for North-East Derbyshire (Mr. Barnes), and he did not answer the question put to him by my hon. Friend the Member for Broxbourne (Mrs. Roe). Will he admit that there is rationing in the national health service? There always has been, although the Secretary of State persistently refuses to admit that. The inconsistency in the availability of beta-interferon and many other inconsistent availabilities in the national health service prove that. If the Minister is not prepared to admit that there is rationing, there is no way that we can have a grown-up debate about the future of the health service. Will he admit it now?

Mr. Milburn: I am not sure that grown-up debates and the hon. Gentleman are always as compatible as they should be. The real reason why the Opposition are seeking to foment a debate about rationing is not beta-interferon, but the Conservative party's failure to match our record levels of investment in the national health service. It is about time the Opposition came clean. If they are not prepared to match pound for pound the extra investment in the hon. Gentleman's health authority and others, they should list item by item, procedure by procedure and treatment by treatment, those patients who will lose out and will not now be treated on the NHS, and will be forced to go private. The difference between the hon. Gentleman's party and the Labour party is that we believe in treatment being available according to clinical need and not ability to pay.

Waiting Lists

Mr. Jim Cunningham: If he will make a statement on the investment he is making to reduce NHS waiting lists over the next three years. [57353]

Mr. Nick St. Aubyn: If he will estimate the total cost of his planned reduction in waiting lists; when he expects to achieve that reduction; and if he will make a statement. [57354]

Mr. Tom Cox: If he will make a statement on his Department's funding for reductions in NHS waiting lists over the next three years. [57361]

The Secretary of State for Health (Mr. Frank Dobson): Waiting lists have fallen by more than 98,000 since April. The Government are investing an extra £21 billion in the national health service over the next three years, and I announced today the main allocation of next year's funds to health authorities, amounting to a total of £31 billion. That includes £320 million specifically for reducing waiting lists, to help us to deliver our promise to reduce them to a total 100,000 lower than the total that we inherited.
The extra allocation announced today for Coventry—which covers the constituency of my hon. Friend the Member for Coventry, South (Mr. Cunningham)—is £13.7 million. The extra allocation for West Surrey, which covers the constituency of the hon. Member for Guildford (Mr. St. Aubyn), is £19 million. As for the two health authorities that serve the constituency of my hon. Friend the Member for Tooting (Mr. Cox), Lambeth, Southwark and Lewisham will receive an extra £38 million, while Merton, Sutton and Wandsworth will receive an extra £25 million. All that is in addition to what the Tories planned to provide.

Mr. Cunningham: I am sure that many people, not only in Coventry but throughout the country, will welcome my right hon. Friend's statement. Is he aware that the shadow Chancellor has said that our investment in the national health service is reckless, and that the shadow Secretary of State for Health has said that it is a waste of time spending money on waiting lists? What is more appropriate—the investment of money in reducing waiting lists or the recklessness of the Tories in not investing any money at all?

Mr. Dobson: I fully expect all honest Tory Members to say now that, as the shadow Chancellor says that our health spending is reckless, they do not want the money to be spent in their constituencies.

Mr. St. Aubyn: I congratulate the Secretary of State on attempting to match the previous Government's record of real increases in health spending. May I point out, however, that the number of patients waiting for more than 12 months has risen by more than 30,000? Will the right hon. Gentleman now admit that the only reason for the general decline in waiting lists is that simple, quick operations are being performed before longer, more complex ones?

Mr. Dobson: No—and the number of people waiting for more than 12 months for treatment has fallen by 9,000 since June this year.

Mr. Cox: I thank my right hon. Friend for his statement. It is very different from the statements that I heard under the last Administration: in those days we repeatedly sought meetings with Secretaries of State, only to be told, "No money is available for your area".
Are not the facts that there is extra money, that more people are being treated and that waiting lists are being reduced a clear indication of this Government's commitment? I hope that my right hon. Friend will announce those facts not just in the House but throughout the country, because it is not just areas such as mine that are benefiting from the Government's policy: the whole country is benefiting.

Mr. Dobson: I have to agree with my hon. Friend. The two health authorities that serve his constituency will receive more than £62 million extra to serve the people next year, which will bring spending in those two areas—many parts of which are very deprived—to nearly £8 billion. That is hugely in excess of the funds that the previous Government made available in the past, or intended to make available in the future. I am glad that we are doing this; I am proud that we are keeping our promises; and I am confident that the excellent 1 million staff in the health service will be able to deliver the better, quicker, more efficient top-quality health service that we all want.

Miss Ann Widdecombe: Will the right hon. Gentleman confirm that, when he said yesterday in the House that patients waiting for the removal of internal fixations have never been included in official waiting list statistics, he was utterly incorrect?

Mr. Dobson: No.

Miss Widdecombe: Then can the right hon. Gentleman explain why a very clear memorandum issued by Bradford hospitals trust makes it clear that before June, when these convenient falls began to happen, such patients were included in its monthly statistics, whereas after that they were not?

Mr. Dobson: As for the practices in Bradford, I have no control over what that trust has been doing directly, but, as I explained to the right hon. Lady yesterday, the rules that were introduced by her Government, whether they are being complied with in Bradford or not, stated that, if someone with a broken arm had a metal plate inserted and was told by his doctor, "You need it in for 18 months, so you do not come back to have it removed for a further 18 months," that person did not count as someone who was waiting for an operation for 18 months. The previous Government were daft in a lot of respects, but they were perfectly sensible when they said that such people should not be included on the waiting lists.

Miss Widdecombe: We may have been perfectly sensible in suggesting that such operations should not be included in the monthly returns, but the fact is that they continued to be so in some authorities, including Bradford. They have now been taken out of the monthly returns, so part of the fall in waiting lists announced by the right hon. Gentleman can be accounted for by patients who have not actually received their treatment.
Will the right hon. Gentleman now do three things? First, will he admit that his statement yesterday was incorrect? Secondly, will he apologise to the nation for making it and, thirdly, will he admit that an awful lot of those drops in waiting lists up and down the country represent numbers being fiddled and patients being diddled?

Mr. Dobson: Up and down the country, in the first six months of this year, 250,000 more people were treated by the national health service than were being treated in the equivalent half of last year, and the year before that. The right hon. Lady apparently wants us to include in waiting lists people whose doctors have said that they should not have an operation for six, 12 or 18 months. To repeat


what I said yesterday, to advocate that is just as daft as suggesting that a woman who discovers she is pregnant today should count on the waiting list for the next nine months.

Mr. Bruce Grocott: I warmly welcome the 3.92 per cent. increase in real expenditure that my right hon. Friend has made available to Shropshire health authority. I ask him to remember, as the House will remember, that each month that the waiting lists increased was met by vociferous criticism from the Opposition. I ask him therefore to place in the Library all the letters of congratulation that he will receive from Opposition Members now that waiting lists are falling.

Mr. Dobson: I can assure my hon. Friend that the Commons Librarian will not need to set aside much shelf space for that purpose, but I am sure that, in common with their elected representative, people in Shropshire will be glad to know that they will benefit from an extra £15 million towards their health care next year. That, of course, is merely the first round of the available extra money.

Mr. James Paice: Does the Secretary of State recognise that, however hard the NHS works, it has to have a throughput on beds? How on earth could the NHS in Cambridgeshire expect to fulfil its obligations when the right hon. Gentleman granted the local social services £1 million less in cash terms in their standard spending assessment? We now have serious problems, particularly with elderly people who remain in hospital beds long after they should simply because social services have no money to fund their care outside?

Mr. Dobson: I hope that the hon. Gentleman will therefore welcome the extra £250 million that the Chancellor announced next week—

Mr. Philip Hammond: Next week?

Mr. Dobson: I meant last week. I must not give the game away. I hope that the hon. Member for South-East Cambridgeshire (Mr. Paice) will therefore welcome that £250 million extra, which will help local social service departments, hospitals and the rest of the national health service. That money will ensure that people, particularly frail, elderly people who should not be in hospital if they could be properly looked after at home will receive such care at home, and that those in hospital who could be discharged if there was someone to look after them at home will also be properly cared for in their own home. That is what that £250 million is for.
In Cambridgeshire, as in other parts of the country, people working in the national health service and in social services departments did a brilliant job last winter with slightly less money and I expect them to do an even better job with a bit more money.

Medical Audit

Mr. Nigel Beard: If he will make a statement on progress in establishing a system of medically auditing the effectiveness of various therapies employed in the NHS. [57355]

The Minister of State, Department of Health (Mr. Alan Milburn): In July we published "A First Class Service" which set our plans to establish the new national institute for clinical excellence early next year.
For the first time, NHS professional staff and their patients will be able to look to a single authoritative source for clear guidance about the effectiveness of therapies.

Mr. Beard: I welcome my right hon. Friend's answer and the long overdue steps that are now being taken to disseminate best practice throughout the national health service with the national institute for clinical excellence and the Commission for Health Improvement. Does my hon. Friend agree that the rapid development of medically relevant biotechnology is now likely to provide new therapies that mimic the body's own biochemical processes, allowing the early diagnosis of disease and providing indications of predisposition to disease in certain circumstances, all of which are likely to revolutionise medical practice? Can my right hon. Friend assure the House that new arrangements for medical audit will promote the early introduction of those innovations into the NHS and that there will be the fullest collaboration between the NHS and British companies and research organisations to progress those new developments towards medical use?

Mr. Milburn: I can give my hon. Friend that assurance. As he rightly said, we could be on the verge of some extremely exciting medical breakthroughs that will revolutionise patient care and the life chances of thousands, if not millions, of patients. It is important, therefore, that we achieve our aim, which is to ensure the introduction of more effective treatments into the national health service more quickly than has been possible before. We will do that through the national institute for clinical excellence and our new national service frameworks. We will also do it by abolishing the old internal market which inhibited collaboration and so fragmented decision making that we ended up with thousands of competing health units instead of a single national health service. We want to see a single national health service, providing care according to clinical need rather than depending on where a patient lives or who happens to be their GP.

Mr. Tim Loughton: Is the Minister aware that one direct casualty of the abolition of GP fundholding and a move to commissioning groups has been the provision of physiotherapy services? In West Sussex, many of my constituents who need physiotherapy because they are elderly or have suffered severe accidents are now faced with either not having those essential services or having to pay for them privately, which many of them cannot afford to do.

Mr. Milburn: The hon. Gentleman is wrong about that. Before too long—hopefully within the next three weeks—


we will be issuing new guidance to health authorities and to primary care groups in their shadow form, urging them to ensure the retention of proven and effective services provided by GP fundholding, and that their benefits are spread to all patients. We want to see a levelling up, not a levelling down. In particular, we want to see the end of the two-tier system that GP fundholding introduced into the NHS.

Booked Admissions

Mr. Michael Jabez Foster: What action he is taking to promote booked admission pilots in the NHS. [57356]

The Secretary of State for Health (Mr. Frank Dobson): On 24 September I announced 24 pilot schemes to develop systems of booked admissions so that patients can arrange to go into hospital at times that suit them. A total of £5 million pounds has been made available this year and £20 million will be provided for further schemes next year. We hope that, eventually, the entire system will go nationwide.

Mr. Foster: I thank my right hon. Friend for that reply. Does he agree that, as my constituents can book their holidays and various appointments by telephone, it is about time that they were also able to book by telephone their hospital appointments, rather than waiting anxiously for that brown paper envelope through the letter box?

Mr. Dobson: I certainly agree with that. It is a strange irony that it is difficult for people to make bookings and other arrangements in the national health service—which, for more than 50 years, has served the United Kingdom 24 hours a day, every day of the year—because of its communications system.
We want to enable people who have been told by their GP, "I think you need an out-patient appointment, because they should do some tests at the hospital," to be able—there and then, from the GP's premises—to book an out-patient appointment that suits them. At an out-patient appointment, if they are told by the specialist, "I think you'd better come in as an in-patient," they should—again, there and then—be able to make a booking, preferably for a day of the week and time of the year that suits them. Such a change would be a good step forward and would in many ways reflect the fact that, although services are available 24 hours a day, every day of the year, the system gives a different impression.

Mr. Philip Hammond: We welcome development of a booked admissions system. However, booked admissions will help only those who are fortunate enough to have secured a specialist out-patient appointment to get on to the waiting list initially. The Secretary of State has been asked repeatedly to publish figures on the number of people waiting for out-patient appointments. The figures are already collected and reported to the NHS executive by hospital trusts; all he has to do is to add up the figures. Is not the reason why he refuses to publish the figures that they will

show that, taken as a whole—elective surgery and specialist out-patient waiting lists together—NHS waiting lists are going up, not down as he would have us believe?

Mr. Dobson: I have heard of people trying to change the goalposts once the match has started, but the hon. Gentleman seems to want to change the stadium. In the first six months of this year, the national health service dealt with 67,000 more out-patients than previously.

Miss Ann Widdecombe: What about out-patients?

Mr. Dobson: If the right hon. Lady would just keep quiet and let those who are supposed to answer the questions do so, and stick to her appointed job of asking questions, we might get somewhere.
There is some evidence of a build-up in the number of people waiting for out-patient appointments. We have never denied that. I am asking managers and others in the national health service to make use of the additional funds that we are providing to deal with waiting lists and the £250 million extra that we are providing to deal with the winter to try to pay more attention to those people.
Hitherto, figures have been collected on a basis established by the previous Government—to show how well the then Government were doing in meeting the patients charter. Those figures have been collected, and they will continue to be published. However, I should like to move towards more detailed and up-to-date figures. It is very revealing that the new Government have not only started publishing monthly in-patient waiting list figures but, for the first time, have started collecting such figures monthly. The hapless crew on the Conservative Benches collected the figures only once every three months.

Dr. Howard Stoate: May I, on behalf of my GP colleagues across the country, welcome my right hon. Friend's initiative in ensuring that patients will be able to book out-patients appointments directly from GPs' surgeries? May I also ask him to ensure that, once the initiative has been implemented, out-patient appointments will be booked on the basis of clinical need, to ensure that patients who need to be seen as soon as possible are fast-tracked through the system—thereby eliminating a very significant cause of waiting?

Mr. Dobson: Ever since we were elected, we have tried to make it clear that clinical need should be the major determinant of how quickly people are treated. I hope that, as the information technology system becomes more sophisticated, doctors' and other clinicians' capacity to express their views, and to have their views heeded, will be improved, as that will be to the benefit of everyone. Both patients and those who treat patients like to know that everyone is being treated fairly. People are comfortable doing something that they believe to be fair, and very uncomfortable if asked to do something that they do not think is fair.

Tobacco White Paper

9. Mr. David Rendel: When the White Paper on tobacco will be published. [57357]

The Minister for Public Health (Ms Tessa Jowell): Soon.

Mr. Rendel: Given that there are now hundreds of deaths every day from tobacco-related diseases, does the Minister agree that it is vital to discourage children from ever taking up smoking in the first place and that school nurses have an important part to play in that? What steps does she intend to take to ensure that there are no further cuts in the community school nursing service such as, sadly, are now threatened in Berkshire?

Ms Jowell: I entirely agree with the hon. Gentleman about the importance of protecting children from the impact of tobacco advertising and of taking every effective step to make it very hard for them to get hold of cigarettes. However, there is more to it than that—we have to change young people's attitude towards cigarettes and, in turn, change their behaviour, making them not want to buy cigarettes. I entirely agree that school nurses have a very important role to play in this, as do parents and teachers and the whole range of professionals with whom children come into contact. Measures to prevent children from smoking are already an important part of the healthy schools programme and will feature very specifically in the tobacco White Paper.

Mr. Kevin Barron: Is my right hon. Friend aware that the answer that she gave to the initial question simply means that the frustration felt for many months now by the health lobby will continue? However, more important than the publication of the White Paper is that it should be comprehensive and should address the issues around smoking, which has for decades been the biggest killer in this country. I am pleased that we now have a Government who are prepared to take on these issues on behalf of the public.

Ms Jowell: I thank my hon. Friend and pay tribute to the very great efforts that he made while in opposition to try to protect children from the impact of tobacco advertising. It is in no small part due to his efforts that we now have, for the first time, a comprehensive Europe-wide ban on the advertising and promotion of tobacco. The way in which that will be implemented in the United Kingdom will be set out in detail in the forthcoming White Paper. There is impatience about the publication of the White Paper and getting the policy implemented. We have worked with impatience and a sense of urgency over the past 18 months because absolutely nothing was done in the previous 18 years.

Mr. Andrew Lansley: If the Minister believes that school nurses have an important role to play in this and other respects, will she explain why Cambridge and Huntingdon health authority has effectively abolished the role of school nurses? Will she undertake to evaluate what the adverse implications of that have been before other health authorities, such as that mentioned by the hon. Member for Newbury (Mr. Rendel), go down the same path?

Ms Jowell: No doubt the hon. Gentleman will be pleased that his constituents will be receiving

£14.7 million more for their health care, which will go some way to dealing with precisely the problems that he identifies. Yes, I do think that the contribution of health visitors and school nurses should be effectively evaluated so that we can ensure that what they do is based on the best possible evidence that it will work in practice.

NHS Direct

Miss Melanie Johnson: If he will estimate the number of people to be covered by NHS Direct by April 1999. [57359]

Mr. Alan Johnson: If he will estimate the number of people to be covered by NHS Direct by April 1999. [57364]

The Minister of State, Department of Health (Mr. Alan Milburn): The second wave of NHS Direct, which will be operational by April next year, will cover 20 million people, or more than 40 per cent. of the population of England.

Miss Johnson: I thank my right hon. Friend for that answer. My constituents and I are green with envy that coverage is being achieved elsewhere in the country. As the millennium is approaching, and given the potential of NHS Direct in changing the way in which the ambulance service works and the demands upon it, may 1 have an assurance that my constituents will have NHS Direct by 2000? May I have a pledge from my hon. Friend?

Mr. Milburn: Yes. Like all our pledges, it will be kept. We are a Government who keep our promises. By the end of 2000, NHS Direct will be available in my hon. Friend's community and in every community in the land. The Government have made available an extra £44 million to spread the availability of NHS Direct, not just to second-wave areas but beyond, to ensure that all communities have the benefit of instant access to 24-hour, 365-day-a-year care from expert nurses at the end of a telephone. That is already proving its worth in many communities and we are determined to spread its benefits everywhere.

Mr. David Amess: Will the Minister confirm whether the general public will be able to use the telephone line to ask why the research and development budget has been cut by £10 million, which has been switched to the hospital waiting lists initiative? Will my constituents be able to use the telephone line to ask why, as a result of Government pressure, a local orthopaedic consultant has cancelled an out-patient clinic in order to carry out operations and that, as a result, the waiting time for outpatients has risen from 26 weeks to 40 weeks? Are my constituents right to believe that the figures are being fiddled?

Mr. Milburn: No. The hon. Gentleman's constituents are wrong. That is not the appropriate use for NHS Direct. However, I can tell the hon. Gentleman that his health authority will receive an extra £28 million as a consequence of my right hon. Friend's decisions today. I hope that he and his constituents will welcome that.

Acute Beds

Mr. Bill Michie: What action he is taking to identify the number and use of acute beds in the NHS. [57360]

The Minister for Public Health (Ms Tessa Jowell): My right hon. Friend the Secretary of State announced on 30 September the establishment of a national inquiry into hospital beds. This work is already well under way within the Department and the findings will be published next spring.

Mr. Michie: I thank my right hon. Friend for that reply and for the £367 million plus to Sheffield health authority. The money will certainly help and it is very welcome. May I raise the issue of mental illness, which to a large extent is still considered to be the Cinderella service within the national health service? It needs special attention at present and I am asking whether that would be possible.

Ms Jowell: Obviously, my hon. Friend raises an important point. Certainly it is absolutely crucial to have an adequate number of psychiatric beds to ensure that mental health services can meet and respond to the range of needs in psychiatric patients—for example, by providing day care services locally. My hon. Friend will be aware that an expert group is drawing up a national service framework in order to develop a proper national framework for the delivery of psychiatric services. His point about ensuring an adequate number of beds in relation to those provided for other services will be part of that consideration.

Dr. Julian Lewis: Will the figures for acute beds in the NHS specify how many of them will be in mixed-sex wards in acute psychiatric units? Does the Minister recall the Secretary of State's categorical pledge to me earlier this year that he would put a stop to the building of any new mixed-sex wards in psychiatric units? How does she square that pledge with advice given by the NHS executive to Goodmayes hospital which restates all the old discredited arguments in favour of mixed-sex wards in such units?

Ms Jowell: My right hon. Friend the Secretary of State stopped the development of a mixed-sex ward last time the subject was raised in the House. He will do the same again, if the hon. Gentleman would like to supply details.

NHS Hospitals (Funding)

Mr. David Borrow: What was the average annual real-terms percentage increase in funding for NHS hospitals between 1979 and 1997; and what is the equivalent figure planned for the next three years. [57362]

Mr. Ronnie Campbell: What was the average annual real-terms percentage increase in funding for hospitals in the NHS between 1979 and 1997; and what is the equivalent figure for the next three years. [57363]

The Secretary of State for Health (Mr. Frank Dobson): During the years 1979–80 to 1997–98, the annual average real-terms increase in NHS total net expenditure in England was 3.1 per cent. On 14 July, I announced the Government's investment of an extra £21 billion in the NHS—an average of 4.7 per cent. above inflation over the next three years. Next year's allocation, which was announced today, will mean an extra £9.7 million for the health service in South Lancashire and £12.5 million in Northumberland.

Mr. Borrow: I thank my right hon. Friend for that reply, which demonstrates the Labour Government's commitment to the NHS. I am concerned that residents of South Ribble have to wait 18 months for drug rehabilitation treatment. The Government have announced an extra £12 million for drug advisory services next year. Will my right hon. Friend join me in urging South Lancashire health authority to give a higher priority to drug services? Reducing the waiting lists would have beneficial effects for the health service and important implications for crime.

Mr. Dobson: We have included some earmarked funds to deal with drug treatment over-subscription and drug misuse. I hope that that will benefit my hon. Friend's area.

Mr. Campbell: Is my right hon. Friend aware that Stephen Thornton, the chief executive of the NHS Confederation, has described the level of investment in the health service as beyond his wildest dreams? How many more wonderful dreams does my right hon. Friend have up his sleeve for the health service?

Mr. Dobson: I have been called all sorts of things, but I have never been called a conjurer—so far. I am not sure that I have much left up my sleeve, or even up my right hon. Friend the Chancellor's sleeve—he has a rather more important sleeve than I do. When various pointy-headed academics, those on the Opposition Front Bench and the Liberal party were demanding an average increase over the next three years of 3 per cent., we came up with 4.7 per cent., but standards of courtesy have fallen so low that they never thanked us for it.

Mr. Shaun Woodward: The Secretary of State's announcement of more money for the health service is welcome to every hon. Member, but in Oxfordshire there is real concern about how much of the money will find its way into the local health service. At the Radcliffe infirmary, waiting lists for day in-patient treatment have risen by 119 per cent. in the past 18 months. At the Nuffield Orthopaedic hospital, only four people waited more than 12 months 18 months ago; today that figure has risen to 137 people. I have written four times to the Secretary of State on behalf of my constituents about the impending closure of Burford hospital, without receiving any replies. Will the Secretary of State take the opportunity to reassure my constituents that he will not close a single bed in Witney and that he will save Burford from closure until he does something to reduce the calamitous rise of waiting lists in Oxfordshire?

Mr. Dobson: The hon. Gentleman knows well that I shall eventually have to adjudicate on the propositions


being put forward by Oxfordshire health authority. I am prohibited from announcing my decisions until I have reached them, because I have to be fair to everyone. Today I met a delegation with the right hon. Member for Henley (Mr. Heseltine) about one of the community hospitals in Oxfordshire. Other delegations are coming to see me. I shall listen carefully to them. My officials will confirm that, sometimes to their chagrin, I do not always agree with the proposals that are put to me. It will help that Oxfordshire will be receiving £22.5 million extra next year in order to provide services. Not every delay in Oxfordshire is to do with funding; some of it is to do with the way in which things are run.

Miss Julie Kirkbride: May I anticipate the right hon. Gentleman's response to my question by welcoming any new money that his Government are proposing to spend on Worcestershire health authority? Whatever that new amount may be, will it be enough to stop cuts that his Government are imposing on Worcestershire? Will it be enough to keep open the

accident and emergency department at the Alexandra Healthcare NHS trust hospital in the constituency of his hon. Friend the Member for Redditch (Jacqui Smith)? Will it be enough to keep open the Kidderminster general hospital in the constituency of his hon. Friend the Member for Wyre Forest (Mr. Lock)? If there is not enough money to keep hospitals and A and E departments open, then it simply is not enough.

Mr. Dobson: I am glad to discover that at least one Conservative Member wants to be even more reckless than we are with public funds. She knows that proposals for changes in services in Worcestershire must come to me for decision. I shall announce my decision when I have taken it. The £18.2 million extra that Worcestershire will receive as a result of today's announcement ought to improve services and the performance of everybody in the county. That should benefit the people whom the hon. Lady represents. During debates on the next Finance Bill, I trust that she will be putting her feet where her mouth is and voting with us in the Lobby for the money that we are providing.

Road Traffic Reduction (National Targets) (Amendment)

Mr. Tom Brake: I beg to move,
That leave be given to bring in a Bill to amend the Road Traffic Reduction (National Targets) Act 1998 to require the Secretary of State to produce a report on reducing traffic levels to below 1997 levels by 2002.
Only a few months ago, I spent six or seven hours in Committee considering what was then called the Road Traffic Reduction (United Kingdom Targets) Bill—now, of course, the Road Traffic Reduction (National Targets) Act 1998. During debates on that Bill, the Under-Secretary of State for Transport, the hon. Member for Hampstead and Highgate (Ms Jackson), told hon. Members on at least seven occasions that the Government believed in reducing the level of traffic on the roads. That was no slip of the tongue. When questioned persistently by the hon. Member for Christchurch (Mr. Chope) on whether the Government intended to reduce traffic or merely slow down the rate at which traffic increased, she said:
I thought that I had made the position clear … I shall have to be infinitely more precise in my choice of words … My argument—which, I am sure, will be endorsed by all Committee members—is that there should be a reduction in road traffic."—[Official Report, Standing Committee E, 18 March 1998; c. 55.]
That is hardly surprising; after all, the Under-Secretary was only repeating the policy on which Labour fought the election, the promise that she gave her constituents before the election and promises given in an interview in The Guardian by the Deputy Prime Minister. I shall come to those promises in detail later.
Why did the Under-Secretary tell my hon. Friend the Member for Lewes (Mr. Baker) just one week ago that she intended merely to "reduce traffic growth"? She knows as well as every hon. Member that that falls far short of what she, her colleagues and her party promised before and since the election, and during the election campaign—promises that have been repeated in the House. That is why I am introducing the Bill.
The Bill requires the Government to ensure that, when they publish reports under the Road Traffic Reduction (National Targets) Act 1998, they set out policies and measures aimed at reducing traffic over the lifetime of this Parliament. It is a matter of deep concern that I have to introduce the Bill, but I am so rapidly losing confidence in the Government's intention to keep their promises on traffic reduction that I am left with no alternative.
The Government must be tough on pollution and tough on the causes of pollution, especially as, since the election, the World Health Organisation guidelines on nitrogen dioxide have been exceeded more than 110 times; on ozone, 472 times; and on sulphur dioxide, more than 80 times.
The Government fought the election promising that they would "reduce and then reverse" traffic growth. That promise appeared on Labour's election internet site, in their policy handbook and in policy briefings sent out by Millbank to voters. The message is clear—that they will "reduce and then reverse" traffic growth. Reversing traffic growth means reducing the number of cars and lorries on our roads. There can be no doubt about that.
The Deputy Prime Minister confirmed that policy shortly after the election, when he told The Guardian on 6 June 1997:
I will have failed if in five years time there are not many more people using public transport and far fewer journeys by car. It's a tall order, but I urge you to hold me to it.
His hon. Friend the Member for Hampstead and Highgate was also clear about her belief in reducing traffic. In the run-up to the general election, and at the request of constituents, she signed early-day motion 289, which called for a 10 per cent. traffic reduction target. Two weeks later, in Hampstead high street, she signed a national petition, for which signatures were being collected by the local Friends of the Earth group, calling for exactly the same targets. She could not have made it clearer to those voting for her that she believed that traffic levels in Britain should be reduced.
The hon. Lady also made it clear during the passage of the Road Traffic Reduction (National Targets) Bill that the Government supported reducing traffic. Not only did she state the Government's support for traffic reduction on at least seven occasions: she actually urged Committee members to vote against an amendment tabled by the hon. Member for Christchurch that focused on what he correctly called the "vital issue" of the difference between road traffic reduction and reducing the rate of increase of road traffic. Despite all that, the White Paper failed to set out policies to achieve traffic reduction. In paragraph 2.24, it stated clearly:
The New Deal for Transport therefore sets the framework to reduce traffic growth.
Again, Ministers know that that is a step backwards.
I challenged the Deputy Prime Minister on that point at Question Time a couple of weeks ago, when I asked whether he would keep his promise to The Guardian, and Labour's pre-election promises. His reply was clear:
I agree to keep to that commitment: judge my performance in five years".—[Official Report, 20 October 1998; Vol. 317. c. 1071.]
Yet, only days later, his Under-Secretary was saying the opposite in a written answer:
in order to tackle the congestion and pollution that is caused by road traffic, we need to reduce the rate of road traffic growth. "—[Official Report, 3 November 1998; Vol. 318, c. 458.]
Not only does that break her repeated earlier promises, but it is patently rubbish. Tackling congestion by planning to allow more cars on the road, which is what this policy means, is a policy doomed to fail.
The White Paper predicts that, over the next 20 years, traffic could grow by over one third. The Under-Secretary promises that she will slow that growth. If she reduces it to 30 per cent., will she claim that as a success? Will she claim that congestion has been relieved? Will she admit that she fought the election promising a 10 per cent. reduction in traffic, and achieved 30 per cent. growth instead?
The signals that the Government are planning to backtrack on their election promises are strong. The Under-Secretary seems keen to ditch her own promises, too—a warning sign, perhaps, to voters in the London mayoral election, and one to which I can promise the Liberal Democrats will draw people's attention.
The Deputy Prime Minister at least restated his promise to me last week, yet even his own Ministers seem determined to undermine him, and we have all heard about the teenyboppers at No. 10 destroying his radical intentions.


Against that background, my Bill is crucial. As the Under-Secretary told the House on 24 April 1998:
The country cannot continue as it is—there must be a reduction in road traffic."—[0fficial Report, 24 April 1998; Vol. 310, c. 1119.]
I urge all Members of the House to support the Bill.
Labour Members, in particular, should back it. I believe that it is a Prescott Bill, as it would put the words of the Deputy Prime Minister into statute. Let the House remember his words:
I will have failed if in five years time there are not many more people using public transport and far fewer journeys by car. It's a tall order, but I urge you to hold me to it.
My Bill will hold him to it. I hope that the House will support it enthusiastically.

Question put and agreed to.

Bill ordered to be brought in by Mr. Tom Brake, Mr. Cynog Dafis, Mr. Jeremy Corbyn, Mr. Peter Bottomley, Mr. Matthew Taylor, Mr. Norman Baker and Mr. Andrew Stunell.

ROAD TRAFFIC REDUCTION (NATIONAL TARGETS) (AMENDMENT)

Mr. Tom Brake accordingly presented a Bill to amend the Road Traffic Reduction (National Targets) Act 1998 to require the Secretary of State to produce a report on reducing traffic levels to below 1997 levels by 2002: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed [Bill 257].

Factory Closures

Madam Speaker: I must inform the House that I have selected the amendment standing in the name of the Prime Minister.

Mr. John Redwood: I beg to move,
That this House is concerned about the continued spate of factory closures and job losses; condemns the Government's failure to take urgent action to give manufacturing a chance; believes that this Government's actions in increasing business taxes and regulation have made the position worse; asks the Government to explain how far they will go in implementing the McKinsey Report on productivity; and urges the Government to change policy before more jobs are lost.
We urge the House to use this opportunity today to have a serious discussion on the current problems in manufacturing business. I would be surprised if Labour Members felt so strongly that they would wish to break their word to the Whips and vote for our motion, although it is framed in a way that they should find entirely acceptable—it is about the present and the future, and it urges the Government to do something to help all those manufacturing companies that are now in trouble.
I am a realist—I do not see many brave souls on the Labour Benches who are about to vote for our motion. However, I hope that they will use this opportunity in the debate to speak for their constituents and the companies in their constituencies. We know that they are suffering and that they need a strong voice in Parliament. We will be that voice from the Opposition Benches, but we think that it is time for some voices from the Government Benches to tell the Government the truth about the factory closures and job losses.

Mr. Gerry Sutcliffe: If we are to have a sensible debate about the future, we must remember the past. Why was manufacturing standing at 30 per cent. of gross domestic product in 1979 and down to less than 20 per cent. when the Conservative party left office?

Mr. Redwood: Gross domestic product went up massively and the service sector grew even more rapidly, therefore increasing its share of the action. However, I know the argument that will come from the Government. We have heard it many times, so let us do the routine quickly so we do not waste too much time on it. Yes, we got it wrong in the early 1990s. Yes, the Labour party fully supported the actions we then took. Yes, we have apologised. That is not the point of today's debate. There has been a general election since then, and many things have changed.
The new leadership of the Conservative party wants to look to the future and offer heartfelt advice, based on our successes and our mistakes during our period in office. I hope that that means that the Secretary of State can now ditch most of his speech and tell us about the present situation—in which manufacturing is suffering—and the actions that he may take with his right hon. Friends to make things better for manufacturing.
Yesterday was just another day in the sorry progress of manufacturing under the Government. ICI closed a works in Billingham. Cooper's tools transferred its


manufacturing to Germany and to Mexico from that important plant in Washington new town in the north-east. I hope that the Secretary of State understood that—the company closed the plant down not because of a worldwide shortage in demand but because it thought that it was cheaper to make things in Germany.

Mr. Ronnie Campbell: The right hon. Gentleman mentioned the north-east. In my constituency, Wilkinson Sword, the razor blade manufacturer—an American company—closed down entirely and invested in a company in Germany. When I asked the company why, I was told that it had nothing to do with the pound or with interest rates. The company said that it was cheaper to sack British workers than German workers.

Mr. Redwood: I would be surprised if that were the only explanation of the company's actions. Why would it want to sack the British workers? A company does not sack workers because it is cheaper to sack them here than somewhere else; it does so because it can no longer make money in the market concerned and in this country and thinks that it can benefit its business by transferring the work elsewhere.
If the hon. Gentleman is so worried about that factor, he should urge his right hon. Friend the Secretary of State to do something about it. I do not agree with him about why Wilkinson Sword decided to pull out. It decided to pull out of the north-east, like many other firms that have done exactly the same in recent weeks and months, because the Government have made it too dear for manufacturers to make things in Britain and that area is suffering as a result—[Interruption.] Labour Members seem to deny that. Are they forgetting that Siemens has reduced its work force by 1,100 and cancelled a major plant and investment in the north-east? Three hundred and fifty jobs have gone from Wilkinson Sword, 600 at the Vickers tank factory, 2,000 at Claremont Garments, 500 at the British Oxygen Company, 730 at BASF and 660 at Grove Cranes. I have here a long list of job losses in the north-east since June, which I will not bore the House by reading. However, every one represents an industrial tragedy and a series of family tragedies for the people tied up in it. It is about time that the Government woke up to what is going on in the backyard of the Secretary of State for Trade and Industry, in his constituency of Hartlepool.

Helen Jones: If, as the right hon. Gentleman says, every job lost is a tragedy, will he explain why, when he was in the previous Government, he allowed 8,000 manufacturing jobs to go from my area and never said one word about it?

Mr. Redwood: I never thought that the loss of manufacturing jobs was a good thing. The hon. Lady does not know what I was saying within the Government when we were facing those problems. We were governed by collective responsibility and, as I have said, my right hon. Friend the Leader of the Opposition has acknowledged on behalf of the party that mistakes were made in the early 1990s. The fact that such mistakes have been made should

be a reason for the Government to learn from them, not to crow about them and then make exactly the same mistakes or worse.

Mr. Ian Bruce: We need to start looking forward, but let us try to strike a balance. The last two factories in which I worked have now been closed. The first closed in 1975, when I had the painful job of working with the people who were being made redundant to help them find other jobs. Before then, I had worked at a factory in the borders of Scotland that produced printed circuits. The Government have now ensured that that factory has to make all its workers in Selkirk and Galashiels redundant, but the Government' s only comment is that we need more productivity. They do not understand, so they should stop sneering.

Mr. Redwood: My hon. Friend makes a powerful point. Our sadness is that fine jobs are going and fine factories are closing—factories that we fought to get in this country or that decided to locate and grow here because they liked the economic policies that were being pursued. So much of that good legacy has been dissipated in 18 short months under this Administration.
Meanwhile, the Secretary of State for Trade and Industry strolls on the Copacabana in Rio, plays courtier to the Prince of Wales, opens a motor show early to suit his personal and social convenience and turns a blind eye to the true problems of British business. We hear him in blunder after blunder, saying that he is no fan of greasy overalls or of horny-handed toilers in industry. As one who has never worked in industry, he obviously finds it difficult to understand how one makes things and the sort of background that one needs to do so profitably and to sell them abroad.
The right hon. Gentleman has become the Minister for manufacturing recession and the Minister for factory closures. He still thinks that he can spin enough to spin business out of trouble, but the more he spins with the odd piece of good news, the more ridiculous he looks and the more interest there is throughout the country in gloomy survey after gloomy survey and closure after closure.

Ms Helen Southworth: Has the right hon. Gentleman spoken recently to the Chemical Industries Association Ltd? Three of its members are located in my constituency. When I spoke to the chief executive last night, he expressed serious concern that the Opposition were talking down the economy and the industry. He said that he was having to make considerable efforts to counteract the effects of that talking down, which is damaging his markets.

Mr. Redwood: It is a case of the Government doing down the chemical industry, not of the Opposition talking it down. My colleagues and 1 have been scrupulously careful never to talk us into a recession. Whenever I have been invited by broadcasters to go that bit further and predict an overall recession here, I have said that I do not wish to do so because I have no wish to make things worse than they already are.
It defies both logic and evidence, however, to say that there are no problems in manufacturing industry. I hope that the hon. Lady reads the surveys. I hope that she has


read the profit and loss figures being reported. I hope that she has read all the news of closures and redundancies. If she has read and understood any of that, she will realise that we are not talking industry into problems. The problems are real, and they are immediate. It is up to the Government to change their policies before they do even more damage.

Mr. John Randall: Does my right hon. Friend agree that not just manufacturing is affected? The retail trade, in which I have an interest, is also being hit. We do not want to talk down the economy, but one of the first things that one learns in business is to identify a problem, admit to it and deal with it. The Government singularly fail to do that.

Mr. Redwood: My hon. Friend is absolutely right. I hope that the debate will persuade the Government to recognise, even at this late hour, that there is a problem. We are not making it up. The Confederation of British Industry, the other big business institutes and companies up and down the country share that view. One need only read Ceefax or the financial pages day after day to see how serious the problems are.

Mr. Christopher Gill: It may help my right hon. Friend to know of some headlines in the Shropshire Star: in September, "County dole figures show a sharp rise" and, in October, "300 workers take pay cut". The latter story noted:
More than 300 workers at a Shropshire company are to take a pay cut to save their jobs.
A week later, the front-page headline was "Rover crisis hits county". The difficulties are real. There is no use the Government pretending that there is no crisis. The crisis is here, and it is affecting people's jobs in Shropshire.

Mr. Redwood: Many of my hon. Friends could make equally powerful points about their constituencies. The problems are real, and the Government must listen to us.
Meanwhile, the Secretary of State likens himself to John the Baptist. I think that John the Baptist was closer to being an atheist than the Secretary of State is to understanding British manufacturers. He has invited us all not to a baptism, but to a funeral for British industry. He will discover that his enthusiasm to drive the story of factory closures out of newspapers and off the media will backfire terribly. There is so much worry in the country that the media will have to pick up that concern despite the right hon. Gentleman's guidance to the contrary that it is of no interest to people outside the House.
I trust that, when the Secretary of State speaks, he will not play too heavily on the welcome news of new jobs in construction announced by British Petroleum yesterday. We need lots of such announcements, because, by its nature, construction work expires every time a contract finishes. New contracts are always needed to keep construction workers in employment. The Secretary of State should not be confused into thinking that those jobs are new jobs in manufacturing or chemicals. The jobs tally for BP's investment is plus 225 new jobs for the new plant when it is up and running, but minus 150 jobs at Baglan, where there will be a compensating closure. The sum of the good news for the chemical industry is a gain

of 75 jobs, but that small, though welcome, announcement was more than swamped by yesterday's other announcements of losses elsewhere in manufacturing.

Mr. John Bercow: My right hon. Friend is advancing a powerful case. In support of it, will he recall the simple, salient fact that there have been 19,000 job losses since the Secretary of State assumed his post?

Mr. Redwood: I am most grateful to my hon. Friend for that intelligence. I had not counted the figures up in that way, but his figure sounds entirely possible. Perhaps the total is even more. I have noted announcement after announcement in the press, on television and on the radio since the Secretary of State took up his responsibilities.
The Secretary of State recently made a trip to the United States of America. I welcome the fact that he is learning from businesses there; they have things to teach us. However, I hope that he will not ignore successes at home. Far from wishing to talk down British business, I spend much of my time talking it up, to counter the awful words of the Secretary of State. He blames everyone but the Government for what is going wrong in fine, productive, successful companies that are in deep trouble because of the Government's policies.
The Secretary of State claims to have had a flash of inspiration and light, to the effect that clusters work. If lots of large and small investors can be placed side by side, he claims, that will generate more jobs, more companies and more success. I wonder whether he has ever thought about the fact that, just a few miles from here, a little east of Westminster, is one of the oldest and most successful clusters of business in the world. It is called the City of London. The City of London was a successful cluster of inward investors and home-grown businesses before Columbus even sailed to America. But what does the Secretary of State do? He does not go to the City of London to congratulate it and see what he can do to help it; he, with his colleagues in Brussels, threatens it with a withholding tax and with dire consequences if it does not follow his political agenda. He will have to learn that even great success stories such as the City of London need care and attention from Ministers when economies are in troubled times.
Does the Secretary of State ever pause to think that Hatton garden and Harley street are also examples of successful clusters developed by the United Kingdom a long time ago? He is right to think that Silicon valley in the United States of America is a great success story, but is he aware that, if he travelled 40 miles to the west of London, he would be in the heart of a great British success story—another silicon valley called the Thames valley? He may not want to come to my constituency, where there is an enormous amount of enterprise and where unemployment is 0.9 per cent., but he may like to go to the constituencies of his hon. Friends the Members for Reading, East (Jane Griffiths) and for Reading, West (Mr. Salter), where he will see great success. Why does he not go there and learn from those experiences? Why does he not then take an interest in Hartlepool, where unemployment is 10 per cent. and where male unemployment is 13.5 per cent., and why can he not apply some of the success stories from the Thames valley to Hartlepool, which is what I would want him to do if I were one of his constituents?

Mrs. Claire Curtis-Thomas: I am sure that my right hon. and hon. Friends will agree with me on the right hon. Gentleman's record on clusters. I am pleased that he acknowledges that clusters are vital to our economy, but, having admitted that, will he reflect on the Conservative Government's performance after 1992? I offer some statistics. In 1992, under the Tory Administration, 62,767 businesses failed—such a glowing acknowledgement then of clusters and their effectiveness in the economy. In 1993, there was a rapid improvement, with 55,000 failures. Why do we not go to the year before the Conservative Government were unceremoniously ousted, when their glorious achievement in recognition of the significance of clusters throughout the nation resulted in only 36,000 business losses?

Madam Speaker: Order. I hope to call the hon. Lady during the debate.

Mr. Redwood: The hon. Lady has probably made her speech already; she clearly has not been listening, because I dealt at the beginning of the debate with the point that she has rather tardily made.
The truth is that the Government have transformed the United Kingdom from being the number one place for new investment for multinational companies to the number one place for closures. Now that there are some problems in the world economy, where do such companies turn to to dismiss their staff and close their factories first but the United Kingdom, because they know that it is in the United Kingdom that the climate has deteriorated most dramatically.

Mr. Michael Clapham: The right hon. Gentleman refers to investment, but he must be well aware from the figures shown, for example, in the McKinsey studies for the Treasury that, because for 18 years the Conservative Government failed to invest at the rate of our competitors, we are now in a situation where the Germans invest 67 per cent. more per worker than we do, the Americans invest 52 per cent. more, the Japanese 55 per cent. more and the French 46 per cent. more. Moreover, it is a little rich of him to talk about clusters when he was part of a Government who, in one fell swoop, put 32,000 miners on the dole.

Mr. Redwood: The hon. Gentleman has not realised that the McKinsey report is based on entirely arbitrary exchange rates—purchasing power parity rates—considerably below recent market exchange rates. That is why it shows output per head in the United Kingdom as lower than output per head in west Germany. Incidentally, it compares us not with the whole of Germany, just with west Germany. Were we to make the comparison at recent high market exchange rates, we would have a very different picture of Britain's relative success.

Mr. Desmond Swayne: Johnson and Johnson, which makes orthopaedic parts, is closing its plant in my constituency and moving to Cork. It is doing so not because it is unwilling to invest—it will invest a great deal in Cork—but because the Government have made the climate for investment so hostile.

Mr. Redwood: That is another good example of the point that I am making. The danger—indeed, the reality—

is that investment intentions will be transferred from the UK, which is now regarded as a hostile climate for investment, to countries such as Ireland and Germany, also within the EU. Although costs in those countries used to be much higher, the relative advantage is now rather different because the Labour Government have made it so dear to make things in Britain.

Mr. Edward Leigh: The hon. Member for Barnsley, West and Penistone (Mr. Clapham) has clearly read not the original McKinsey report but only a briefing supplied to him by the Labour party. Had he read the report, he would have seen that it makes it clear that we should compare ourselves with America, and that our economy and that of Europe generally are becoming increasingly less competitive because of over-regulation of the type imposed by the Labour Government on British industry.

Mr. Redwood: My hon. Friend is right. The exchange rate differential is less important in the case of America because McKinsey believes that its rate is closer to the true rate and because, in recent months under this Administration, it has not been as high, relatively, as the Deutschmark rate. Thus there is a technical as well as a sound reason, based on the relative performance of economies. I agree with my hon. Friend that labour productivity in this country is not as high as it is in the US. Later in my speech, I shall discuss what the Government should do about that.
The House may like to remember what some large overseas investors were saying about this country just a little while ago when they decided to set up business here. For example, when Siemens decided to build an important plant in Britain in 1995—quite recently—it said:
Our decision to build the new semiconductor plant here in the UK is a recognition of the pro-business environment which exists and the skills and commitment of the British workforce.… we have not invested here because we see the UK as a low-wage economy.
Siemens recently decided to close that plant because none of those conditions remains true, as the Government have decided to make it too dear to make things in Britain. [HON. MEMBERS: "That is not true."' Hon. Members say that that it is not true. What other explanation is there? Siemens has not closed its factories elsewhere in the world, but it has decided to close the British factory, despite the fact that, a short while ago, it felt that Britain was the best place to invest.
If business taxes are increased by £25 billion and business regulation is increased by …14 billion over the lifetime of this Parliament, Britain will become very uncompetitive. The productivity problem is not of industry's making; it is of the Government's making. It is they who are bleeding industry dry by taking money out of its tills and coffers and putting it into the Treasury or administration.

Maria Eagle: Would the right hon. Gentleman care to quote Siemens's reasons for closing its factory as carefully as he quoted its reasons for coming here in the first place? As I recall, it spoke about the worldwide recession and the collapse in its market. Is it not easy to see why it would choose to make


redundancies here? One legacy that the previous Government left this country is that it is now much easier to sack people here than it is in other countries.

Mr. Redwood: Of course there are problems in the microprocessor market worldwide. We have always accepted that. [Interruption.] The hon. Lady has not been listening. I have always said that on the Siemens issue. The question that I have always posed is why, given that there are problems, Siemens closed the British factory and not the others. Why has it chosen to close a modern, state-of-the-art factory, having made such a huge investment in Britain so recently, and why has it changed its view of Britain dramatically since 1995? Rather than close factories in Portugal or Germany, it chose to close the most modern plant—in Britain—because it had become too costly.

The Secretary of State for Trade and Industry (Mr. Peter Mandelson): The right hon. Gentleman cannot get away with this. The Siemens management, from the chairman and chief executive downwards, have made it consistently clear in all public statements and all discussions with me that the closure of the plant on north Tyneside had nothing whatever to do with domestic economic considerations. The reason that they cited was the collapse of the world market in semiconductor products. If the right hon. Gentleman is to be taken seriously in the rest of this debate, he would do well to withdraw his ridiculous claim.

Mr. Redwood: The Secretary of State must explain why Siemens closed in Britain and not elsewhere. That is the important question.

Mr. Mandelson: What is more, the right hon. Gentleman should be aware that that was not the only plant that Siemens closed. It even closed down lines in those products in its home city, Munich, as well as elsewhere. He needs to think again and get his facts right.

Mr. Redwood: Britain was the place where Siemens chose to close a complete factory of a most modern kind because the numbers no longer looked nearly as good as they did in 1995, when it was praising the United Kingdom and the policies being followed.

Mr. David Borrow: Will the right hon. Gentleman accept that things are rather more complicated than he suggests, and that currents of investment between Europe and the United Kingdom go each way? Leyland Trucks, in my constituency, will next year produce an extra 4,500 trucks—which means more than 300 jobs—as a result of a transfer of production from Holland and Belgium. That current is going in the opposite direction to that suggested by the shadow Secretary of State. Perhaps he will accept that things are a little bit more complicated than the black and white picture that he paints.

Mr. Redwood: I am not arguing that all the industry will close, but a significant number of factories will close because the Government have made it so much more difficult for business to survive. Of course, there will be some success stories—we shall welcome every one,

because they are good news—but they are a drop in the ocean compared with the massive attrition that is going on in manufacturing.
I remind the Secretary of State of the case of Rover. In 1994, when BMW purchased it, Rover was working at full capacity. A BMW spokesman said:
Plants at Rover are operating at the limits of capacity, and in some instances special shifts were worked.
In 1995—as late as October—the chairman of BMW said:
Great Britain is currently the most attractive country among all European locations for producing cars. This results from the structural reforms initiated by Margaret Thatcher in the early 1980s, the most significant factor being the rearrangement of industrial relations between companies and trade unions".
That was said by the company that is now talking about the possible closure of all or most of Longbridge, which is one of our most important car plants.
It is obvious that something has gone horribly wrong. In respect of the particular factor singled out by the chairman of BMW, we know that the Government are about to throw a spanner in the works of our successful industrial relations reform, but we also know that Rover has moved from reasonable profits to heavy losses and has had to issue a warning that it will not be making profits for the rest of this century.
Why is Rover making those losses? The reason is quite obvious. Rover has some good cars—they are not the problem, and the Secretary of State will share our pride in the marvellous new models that it launched at the motor show that he and I visited. The problem is the numbers: the high tax bill, the exchange rate and the high regulatory cost are wrecking the numbers at Rover.

Mr. Lindsay Hoyle: Is the right hon. Gentleman not aware of the price fixing that is taking place in this country? Surely there would be many more benefits to Rover if that were taken away, because it would be able to sell cars much more easily, and surely he must be blaming BMW management in what he is saying.

Mr. Redwood: I look forward to the Secretary of State's answer to that question, and I should like from him replies to a series of questions that I sent him yesterday in the hope that he would get advice and give us the answers in the House today.
I asked the Secretary of State a series of questions about how he intended to respond to the detail of the McKinsey report. Although I disagree with the McKinsey methodology, the report concludes that the reason for the apparent or actual productivity shortfall that it identifies is, largely, Government policy. McKinsey says that it is a series of mistaken restrictions imposed by Brussels and London Governments on various product markets.
I hope that the Secretary of State will answer my questions, building on the point made by the hon. Member for Chorley (Mr. Hoyle) about the car market. Is it correct that the right hon. Gentleman is to lift all restrictions on car imports into the United Kingdom? Why did he not know about that last week, when it was announced by the Chancellor of the Exchequer? The Secretary of State seemed to be completely unaware of the policy, although it should fall in his bailiwick.
Is it correct that the Government think that we have insufficient milk quota from Brussels, and what will they do about it? Would we not have a much more successful


dairy industry if we had more milk quota here in the United Kingdom, so that we had more raw milk to process in this country for higher value-added uses by the food industry? Will the Secretary of State and his colleagues fight in Brussels to get us the milk quota that we need to deal with the problems identified in the McKinsey report?
Will the Secretary of State and his right hon. Friends remove the restrictions on the building of large out-of-town retail developments? The McKinsey report says that that is the main reason why our productivity in food and non-food retailing is lower than that of the United States of America, where out-of-town hypermarkets with large, free car parks are common. How does that square with the Government's much-vaunted policy of restricting out-of-town developments—the very policy that McKinsey says lies at the heart of the productivity difficulty?
Do the Government intend to remove the restriction on building new hotels? That policy is based on arguments similar to those used about hypermarkets, and is also identified in the McKinsey report as the main reason why hotel productivity is lower than in the United States of America.
Does the Secretary of State, as the ultimate regulator of our telephone system, intend to switch our system to that used in America, where local calls are free or very cheap, but where it is more expensive to get access to a phone? I thought that that was against the whole thrust of Labour's policy of opening up access to a phone. The McKinsey report says that, without such a system, our productivity in telephones will never match that of the United States of America.
Does the Secretary of State intend to remove planning restrictions on high-tech developments? The McKinsey reports says that we do not have bigger and better high-tech clusters, like Silicon valley in the United States, because of planning restrictions.
Will the right hon. Gentleman lift the restriction on the licensing of pharmacies, because McKinsey says that the main constraint on higher pharmacy productivity is the restriction on the number, size and type of development?
Will the right hon. Gentleman lift the wholesale exclusive distribution franchise arrangements in the automotive industry? Of course, car prices could be lower if there were car hypermarkets without franchises, but does he think that this is the right time to make that change, given that all manufacturers in the United Kingdom are struggling for profits because of the terrible problem of costs that they face as a result of the Government's policy?
Will the right hon. Gentleman give us more detail on the competition policy that he wants to follow in other sectors? Let us take the newspaper industry. The right hon. Gentleman said that the Competition Act 1998 will provide a more competitive system. Does that mean that he will get rid of the recommended cover price for newspapers? Will he abolish all protected price systems in the newspaper industry? Will he open up distribution to anyone who wants to distribute, thus breaking the current exclusive distribution arrangements?
Those are serious questions, and I gave the Secretary of State full notice of them so that he could prepare serious answers. We shall give him scope to answer, even though

he has not yet published his competitiveness White Paper. Many of the answers have been leaked or have already been given to the country: many of them were supplied by the Chancellor of the Exchequer in the green Budget papers. I hope that the Secretary of State has now read them, and has caught up with what the Chancellor has already announced.
This is the day when we need to know. British industry needs to know and will read the Secretary of State's words. Those in motor manufacturing who are struggling to make a profit or avoid a loss need to know whether their prices will be cut soon or immediately and, if so, by how much, and which of these arrangements the right hon. Gentleman intends to change. Those struggling to make a living in the food manufacturing industry would like a Secretary of State for Trade and Industry or a Minister of Agriculture, Fisheries and Food who will fight for them in Brussels and get more, desperately needed quota.
The whole nation will be fascinated to know how far the right hon. Gentleman intends to go on the licensing of large, out-of-town superstores and different types of big hotel. I suspect that he will get into trouble with his colleagues in the Government if he backs that aspect of the McKinsey report.

Mr. Gerald Bermingham: Does the right hon. Gentleman agree that there is a difference in infrastructure, design, work and social patterns as between the American and the British way of life? They are totally different. Is he suggesting that we should adopt the American system for our way of life by supporting the McKinsey recommendations? Many of us disagree with McKinsey.

Mr. Redwood: I have much sympathy with the hon. Gentleman's view. I favour the British way of life, as hon. Members may know. There are obvious differences between the United States of America—a country which I admire greatly—and the United Kingdom, which has a long history and a much smaller geographical area. Some planning policies that may work in the USA would be offensive in the UK. The Secretary of State will walk all over that difficult balance if he tries both to defend McKinsey and to say that he will not implement quite a few of the report's important recommendations.
I should be very happy to give the Opposition's view on all these matters, but 1 think that I should hear the Government's view first. I have made it clear in my exchanges with the Secretary of State that I fully support the demand for more milk quota from Brussels. That would be a welcome removal of an important block on the food industry. I would want to hear more about the impact on the motor manufacturing industry if precipitate action were to be taken, because I am conscious of the great weakness of that industry at the moment, although I like the idea of a better deal for customers. I hope that the Secretary of State will have something useful to say about the balance of those problems, given that I trust that he, like me, wants a strong motor manufacturing industry, as well as strong distribution.

Mr. Michael Jack: Before my right hon. Friend leaves the topic of agriculture and food, will he tell me whether he agrees that the Government's agriculture policy has been a major contributor to the


downturn of the agriculture engineering industry, and to the current failures in the agricultural business industry? The effects of the Government's bad policies are not restricted to one part of manufacturing.

Mr. Redwood: My right hon. Friend is correct, but I must not stray too far from the DTI brief. I raised the subject of milk quotas because I assumed that the Secretary of State was still technically responsible for the productivity agenda, and, to some extent, for the food manufacturing industry. The recommendation that I mentioned is an important part of the McKinsey report, which in other contexts the right hon. Gentleman praises considerably.
The Secretary of State must tell us what he will do about the textile industry. Is he aware that Marks and Spencer is about to decide to obtain many fewer of its products from the United Kingdom? Has he seen the predictions of trade unions, and of other independent forecasting bodies, that at least 60,000 jobs will go? Is he aware of the dangers facing the motor car industry? When he was having discussions with the management at Rover and trying to blame the work force, did he appreciate that there was a serious threat to jobs at Rover, and that production could be moved outside the country unless he and his colleagues did something about the current situation?
Will the Secretary of State take advantage of today's debate to put the Post Office out of its misery, and tell us whether he will let it expand abroad? How will he square the difficulties with Treasury rules, if he is now ruling out a privatisation—which we would be happy to support, if it would be of any assistance to him?
The Secretary of State and his colleagues are in a fix. They know that everything that they are doing in regard to working time, the minimum wage and the social chapter is deeply regulatory, and is imposing more and more cost burdens on British business. Because they do not wish to admit that, they are trying to close down the whole subject of manufacturing, to tell people that it does not matter, and to suggest that the creation of more jobs in supermarkets is a fair exchange for the factory closures and job losses that they are now recording.

Mrs. Louise Ellman: Does the right hon. Gentleman intend to explain to the House why his Government left a legacy allowing only one region in the country to achieve gross domestic product per head that was at or above the average achieved by European regions? Will he also explain why he opposes the establishment of regional development agencies whose remit is to work with the private sector to invest in manufacturing and other industry, paying heed to local sensitivities and opportunities?

Mr. Redwood: I seem to remember that we left this country in extremely robust economic health. If the hon. Lady cared to look at the comparisons in regard to recent exchange rates, she would see that we are a relatively rich country, in the world and within Europe. She and her right hon. and hon. Friends would discover that if they examined the euro scheme in a little more detail—a scheme that would entail our paying higher taxes to send

massive transfers to the 100 million or more people elsewhere in euro-land who are not nearly as well off as the average person in this country.

Mr. Christopher Leslie: While we are talking about the euro, which has many implications for manufacturing, will the right hon. Gentleman take this opportunity to agree with Michael Portillo, who says that the Conservative party should rule out joining the euro for ever?

Mr. Redwood: I entirely agree with the leader of the Conservative party, who has made a series of superb speeches about the euro, saying that it is far too hazardous a project for this or the next Parliament, and who will lead our strong opposition to this dangerous notion. The hon. Gentleman is rather inexpert at tempting people further; he will have to learn a little more about the ways of the House.
The true plight of British manufacturing is made much worse by a Government who meddle, send bills, interfere and cost far too much. I have here a small selection of the documents that a business man must read before he is even allowed to practise in this country: "Insurance Contributions", "Statutory Sick Pay", "Statutory Maternity Pay", "The Rules Governing Cars", "Manual for Employers on National Insurance", "Small Firms Employing Staff' and "Employers' Further Guide to PAYE and NICs". A small business man would have to read, understand and comply with all that before being allowed to trade. On top of that, and I freely concede that we left quite a lot of burdens on business at the end of our period of government, we have £14 billion more in regulatory costs as a direct result of this Government's actions.
If the Secretary of State wants to know why British industry is suffering, he should just look around him and see what the Government are doing. If he wants to know where the true productivity problem is in Britain, it is in the Government. If he wants to know why British companies are dipping into loss and experiencing very hard times, it is because of the tax bill, the regulation bill, the interest rate bill and the sterling bill with which the Government have saddled them.
British manufacturing needs a break from this Government's wild ideas. It needs a lower cost base. The Government can deliver the lower cost base if they wish to. The fact that they do not wish to shows that they do not care about all those job losses already recorded and are going to do nothing to stop job losses to come.
The Government should heed the advice of the trade unions, which say that several hundred thousand manufacturing jobs are going to go. They should heed the business surveys that show confidence at a new low for this decade. They should heed the advice of all those business people who say that they cannot make things and sell them at a profit from a British base. They should heed the advice of all those foreign companies which, two or three years ago, thought that Britain was the best place in which to do business but which are now closing here first as world economic conditions deteriorate.
The Chancellor may live in fantasy forecast land and the Secretary of State may rather spend time in Rio than in Hartlepool, but we want some answers. We want to know what the Secretary of State will do, how he will respond to the McKinsey productivity challenge and how any of that would make it easier for British business.

The Secretary of State for Trade and Industry (Mr. Peter Mandelson): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
recognises that the last thing business wants is a return to the boom and bust policies of the past, with interest rates of 15 per cent., inflation above 10 per cent. and a budget deficit averaging £41 billion a year from 1992 to 1996; welcomes the Government's decisive action in taking politics out of interest rate decisions, a move which the Opposition clearly does not support; notes that employment is currently 400,000 higher than it was when the Government came into office, and that long-term interest rates are at their lowest for 35 years; welcomes the measures that the Government has taken to encourage enterprise, investment and innovation, and to help unemployed people into jobs; welcomes the McKinsey Report as an important contribution to the productivity debate and notes that, unlike its predecessor, this Government acted to increase competitive conditions through a new Competition Act; and condemns the Opposition for its own record in government, when manufacturing employment declined by 2¾ million and Britain went into deficit on manufacturing trade for the first time ever in peacetime.
Despite the fine words of the right hon. Member for Wokingham (Mr. Redwood), the Opposition have not chosen their timing well for this debate. It follows the announcement of the decision of the Bank of England to reduce interest rates further by 0.5 per cent., which was welcome news for British business, including those in manufacturing—a decision that came too late for the Opposition to decide on a different topic for their Opposition day today. It comes the day after BP announced the creation of thousands of jobs—however hard the right hon. Gentleman tries to discount those jobs—with its investment in Scotland and in Humberside, and it comes on the day when the Confederation of British Industry president, Sir Clive Thompson, buried—or should I say filled in—the Conservatives' so-called black hole in the public finances.
As we all know, Sir Clive is a first-rate business man and an excellent CBI chief, but he is not especially well known for his pro-Labour sympathies, so let me quote him in full:
I do not believe we have a government that is slack on public spending or cavalier with our money, whatever Francis Maude may claim about black holes.
Despite that discouragement from his erstwhile friends, the right hon. Gentleman is not to be held back in his mission to spread doom and disinformation about the economy. His speech contained more negatives than a photographer's studio. In his world, there are grey skies just around the corner, and every silver lining has a cloud. One almost expects his dispirited colleagues on the Back Benches to start swaying from side to side before breaking into a rendition of "Always Look On The Dark Side Of Life."
Why are we being treated to all this pessimism and alarmism? Presumably the answer lies in a carefully researched electoral strategy by Conservative central office, as it is only if the British people were to feel complete despair, utter self-loathing and a total loss of self-respect that they might start to identify with the Conservative party again.
Lest I be accused of being unfair, I must recognise that there are some industries which are promoted by the Opposition. The manufacturers of myth, the peddlers of half-truth and the merchants of doom will all find a good market for their goods in Smith square.

Mr. Redwood: I am delighted that the Secretary of State has given way. He is obviously enjoying himself, but he is replying to a speech that I did not deliver. Will he recognise that, in my speech, I was full of praise for many manufacturing and industrial achievements in this country? However, it is time that the Government were held to account for their many mistakes, which have made things worse. Will the right hon. Gentleman now answer my points?

Mr. Mandelson: As Sir Clive Thompson might say, "When you're in a hole, stop digging".
The right hon. Member for Wokingham dwelt on the McKinsey report, and I want to deal with that straight away. The report is undoubtedly a valuable contribution to the national debate on productivity, and I agree with much of its thrust. However, let us be clear about the thrust of the report, which is that our productivity, relative to that of our main competitors, did not improve during the Tory years, and that that remains a serious challenge for the whole country.
The right hon. Gentleman does not accept that. He rejects the findings of the McKinsey report, and wants to pretend that there is no such challenge for British business and the British economy. He does not even accept that a productivity problem exists. In his speech to the CBI last week, he referred to McKinsey's findings as a stream of "fiddled figures". If there is no productivity problem, how else does he explain the fact that our national income per head is still lower than those of the United States, Germany and France, much as it was 25 years ago?
The fundamental point to emerge from the McKinsey report is the paramount importance of competition. On that score, the Government have already taken major and decisive action by introducing the Competition Act 1998. That is a belated and much-needed piece of legislation, which the previous Administration failed to deliver and which the right hon. Gentleman refused to have anything to do with when he was in the Department of Trade and Industry. So much for the right hon. Gentleman's clarion call for more competition and greater competitiveness. When he had the opportunity to act, he did absolutely nothing; he did not lift a finger.

Mr. Bercow: Will the Secretary of State give way?

Mr. Mandelson: I will come to the hon. Gentleman later. I want to save him up. It would be wrong to squander him too early in the debate.
I do not want to dwell on the McKinsey analysis. However, all the important questions raised in the long letter that I received from the right hon. Member for Wokingham—milk quotas, new hotels and price systems in the newspaper industry—will receive an answer from me in writing in due course.

Mr. Gill: Will the Secretary of State give way?

Mr. Mandelson: I will give way presently.


As the right hon. Member for Wokingham demanded of me, I want to address seriously what I think are the basic issues for debate today. I want to discuss what is happening to the global economy—the real world, if Opposition Members can remember what that is—and what we are doing to help British businesses and individuals throughout the economy, not just in manufacturing, in what we recognise are difficult times. Also, I want to lift our sights a little and look beyond the immediate questions to the future and the challenges facing the British economy.

Mr. Bermingham: I hope that my right hon. Friend understands my question far better than the right hon. Member for Wokingham understood my intervention during his speech. The right hon. Gentleman clearly did not understand a word of what I was saying. All I was saying—perhaps the Secretary of State agrees—is that the McKinsey report must be read in the context of our infrastructure and our social patterns. If it is read in that context, our competition policy a propos hotels and so on will be built to the way in which we work as a nation. I assume that that is what the Government intend to do.

Mr. Mandelson: I did not read any argument or analysis in McKinsey contradicting my hon. Friend's comments. Moreover, I did not read any argument in McKinsey on social standards or on the way in which the United Kingdom—in many respects, fortunately, unlike the United States—seeks to combine competitiveness and fairness in a modern economy. That is what McKinsey is all about, and that is what we shall be pursuing.

Mr. Gill: rose—

Mr. Bercow: Will the right hon. Gentleman give way?

Mr. Mandelson: I give way to the hon. Member for Ludlow (Mr. Gill).

Mr. Gill: Before the Secretary of State takes us on a tour d'horizon of events in the rest of the world, may I bring him back home—to what is happening in this country? Does he realise that what matters in competitiveness is the unit cost of producing a product, and that there are many components to that cost—not only the factor that he has already mentioned, productivity, but also overheads?
The one factor that is within the Government's gift—that it is within their power to do something about—is the one that we call "overheads". Last week, the House debated the working time directive regulations, which, over a full year, will add £2.3 billion to costs to industry. The Government now propose to lift the cap on compensation in industrial tribunals. May I put to the right hon. Gentleman the not-so-hypothetical case of a west midlands engineering company—possibly employing 50 people, and possibly with a turnover of about £3 million—that, if it had an award against—

Mr. Deputy Speaker: Order. The hon. Gentleman should probably now come fairly quickly to his question.

Mr. Gill: Does the Secretary of State realise that the consequence of proposals now in train could be that half

the profit of many typical companies could go in just one award in one industrial tribunal case? Is that the way to encourage British industry?

Mr. Mandelson: I was impressed by the hon. Gentleman's diatribe against the working time directive—although I have not heard Opposition Front Benchers state that they will ensure that the United Kingdom does not have statutory three-week per year holidays for every employee. I do not know whether that is the Opposition's policy. Nevertheless, the hon. Gentleman's diatribe might have been delivered more appropriately during the time of the previous, Conservative Government. They signed up to the working time directive, not us. We are simply implementing something that the previous Government agreed to.

Mr. Bercow: I am most grateful to the Secretary of State for giving way at last. Given his unwise invocation—in his own support—of the comments of the president of the Confederation of British Industry, has he noticed that, as recently as 3 November, the CBI president said that, since Labour took power, the business horizon had darkened because of the "creeping paralysis" of regulation introduced by the Government? The president added that, unless Ministers did something to stop and reverse that trend, the only growth industry in Britain—with the right hon. Gentleman as Secretary of State—would be regulation. Is the right hon. Gentleman proud of that record?

Mr. Mandelson: Sir Clive and many others would have been recalling that, although the previous Administration did indeed repeal 3,000 such regulations—on which I congratulate them—they introduced 10,000 more. Such a record does not allow the hon. Gentleman to give any lectures on business regulation. If the hon. Gentleman will allow me, I should like now to deal with the real world and events in the global economy. Those events are serious, affect us all and have to inform this debate.
As the right hon. Member for Wokingham barely recognised in his remarks—coming as they did from his own rather extra-planetary world—all is not well in the global economy. Asia caught a very serious bout of flu, with repercussions reverberating around the world. No one is immune to the contagion. A quarter of the world is now in recession, which is a fact of life with which we have to live.

Mr. David Chidgey: Is the right hon. Gentleman aware that, although it is predicted that there will be a 7 per cent. growth year on year in world manufacturing export markets over the next four years, it is also predicted that our exports will increase by only 4 per cent? Markets are growing, but we are not taking advantage of them.

Mr. Mandelson: That is exactly the point that I made at the outset, and I shall return to it later. The markets are there—what we need is the competitiveness to make sure that our share of those world markets is keeping up, and, indeed, expanding. That is exactly what our policies are focused on.


No one disputes the fact that there is a very serious downturn in the world economy. There will be inevitable job losses as a result. The question is how much Britain will suffer. Can we withstand the worst?

Mr. Barry Jones: I support my right hon. Friend's rational and robust defence of the Government's policies. I know that his Department aims to help British manufacturing, but yesterday, because of the conditions that he is outlining, major redundancies were announced in my constituency by Umbro, the sports manufacturer.
I wonder how my right hon. Friend and his Department might assist my constituents who are to lose their jobs. I hope that he will accept the memorandum that I have sent to him, which deals with why my constituency should retain assisted area status. Finally, I remind him of my invitation to him to visit Deeside, and specifically the European Airbus factory, which is a great success.

Mr. Mandelson: I am grateful to my hon. Friend. I hope that such a visit will be possible before long. As he will realise, I am extremely concerned about the effect of the decision to which he refers on the employees and their families. I shall deal a little later with the action that the Government are taking to help precisely the individuals and localities that are being hit. As for the assisted area map, my hon. Friend will know that we are currently reviewing it. We have consulted many local authorities, and will consult Members of Parliament. My hon. Friend the Minister for Small Firms, Trade and Industry will be doing that.
I was talking about the world recession. No one disputes the fact that there is a serious downturn and that there will be job losses. The question is how much we will suffer from it.

Mr. John Hayes: Will the Secretary of State give way?

Mr. Mandelson: No.
It is important to understand the weaknesses in the domestic economy—weaknesses that we inherited, and with which the world downturn is making it more complicated to deal. The fact is that we needed to slow down the economy because it was in danger of overheating. It was expanding at an unsustainable rate. Everyone knows that we could not carry on like that if we wanted a platform of economic stability on which we could build sustainable jobs and wealth.
If people are in any doubt about that, they have only to remember where Tory policies landed us in the early 1990s. Of course, the right hon. Member for Wokingham does not like to be reminded of that. He is currently in denial mode, disowning the Tories' record in government as he continues to nurse his rather lukewarm leadership ambitions.
Let us go back to the early 1990s. Before then, the Tory Government had cheerfully and irresponsibly let go of the reins, sidestepping necessary decisions on interest rates, public spending and taxation. We all know the result—an unsustainable boom—but only the Tories have failed to learn the lesson.
The Tories then had to slam on the brakes, plunging the economy into recession. Interest rates jumped to 15 per cent., business cash balances were drained, and many businesses went to the wall. Manufacturing output collapsed, and, in total, 1.8 million jobs were lost. In other words, we went from boom to bust as a result of the policies pursued by the very people who now have the audacity to lecture us about our management of the British economy.
We cannot afford to make such mistakes again. That is why since coming to office we have taken decisive action to get inflation under control, to reduce Government borrowing and to put the public finances on a sound footing, and that is why we are now in a strong position to withstand the worst of this difficult time in the world economy.
No one can be sure that we have seen the end of the crisis in Asia and elsewhere, but the best judgment that the Government can make is that we can and will avoid recession in the United Kingdom.
I have no doubt that the Opposition will find that very disappointing because they are never known to put national interest above party interest. They are absolutely crying out for recession. It is clear from their every utterance that they pray for it, they revel in it and they see it as their only route to political salvation. They care not a jot about the consequences for people's work and people's jobs. It is all propaganda to them.
Thankfully, independent economic forecasters do not wish to play that game. Almost all forecasts show modest growth next year. The International Monetary Fund forecast is close to that of the pre-Budget report. [Interruption.] It is an important matter. I suggest that Opposition Members listen to the economic argument that I am making, as I might be able to tell them something that they did not know or refused to acknowledge.

Mr. Hayes: rose—

Mr. Graham Brady: rose

Mr. Mandelson: I shall give way in a moment.
I know that no politician should place excessive weight on one set of economic forecasts, but equally I am determined that the Tories' wilful pessimism on the economy should not translate into wish fulfilment in its implications for the rest of us and for the British economy.
We should be giving British businesses the benefit of the best and most informed judgment that we can make. We should be talking up the efforts of British businesses and giving them support to ride out the storm, not making the waves rise higher and fall even harder as the Opposition are doing, wantonly and irresponsibly. Perhaps the hon. Gentleman will correct the impression that his right hon. Friend gave.

Mr. Hayes: Rather than this diatribe, would not the right hon. Gentleman do better to emulate the Minister of Agriculture, Fisheries and Food who a few days ago addressed the House in a mood of contrition and humility? Would not a degree of humility and contrition go some way towards satisfying people who have lost their jobs in


Alyn and Deeside and elsewhere that the Government do indeed care about them? If the Secretary of State must have an iron fist, he should at least use a velvet glove.

Mr. Mandelson: The hon. Gentleman, in speaking about humility and contrition, might address the record of the previous Government and the loss of 1.8 million jobs in the British economy as a result of their policies. As for what we are doing about it, I am trying to explain that.
To the extent that it is possible to make any sense of the analysis by the right hon. Member for Wokingham this afternoon—if his outpouring of false assertion, contradiction and lack of logic could be dignified by such a word—and in his previous speeches and statements, all of which I have taken seriously and read carefully, including his article in The Times today, he was trying to make two arguments.
The right hon. Gentleman argued first that the Government's public spending policy is keeping interest rates high, and, secondly, that our policies on taxes and social costs have worsened the business environment—we heard a little more about that this afternoon. He is wrong on both counts.
First, let me deal with public spending. I was glad to hear the right hon. Gentleman give the Government credit for sticking to our predecessors' spending limits for the first two years. However, generous acknowledgement of our prudence is rather difficult to square with his simultaneous charge that our new three-year spending plans explain why interest rates have risen under Labour. I find that difficult to follow.
One has only to look at the connection that the right hon. Gentleman is trying to make between interest rates and what he calls our extravagant investment in the health service and education and our extravagant expenditure to help children in need and pensioners. Without exception, all the increases in interest rates that the Bank has announced took place well before the Chancellor's announcement in the summer. So what is the connection? Where is the link between our spending plans and the increases in interest rates, which, as the right hon. Gentleman will acknowledge, are now coming down?

Mr. Redwood: The Secretary of State will have to try to read a little better than that. I made it clear in my article that the extent to which the Government deviated from our plans in their first two years in office was damaging. For example, welfare to work, which we opposed, was an expensive, failed programme, and was one of the reasons why expenditure was higher than under the Conservatives. The Bank explicitly mentioned in its recent comments on the economy both the minimum wage, which was known to be coming in from the early days of the Government, and the expenditure plans. Will the Secretary of State now read those minutes, and understand their influence on the Bank of England?

Mr. Mandelson: I have read the minutes, I have talked to the Governor of the Bank of England, and I have met members of the Monetary Policy Committee; and not one of them has once criticised the Government's setting of the national minimum wage. They have made no argument at all that it will have the adverse impact that the right hon. Gentleman describes. However, he has not told me in his intervention about the connection that he claims between the level of interest rates and our public spending plans.
Nor is it clear to me what alternative interest rate policy the right hon. Gentleman believes Britain should have followed. Would he have interest rates lower and take risks with inflation? Is that his policy? Is he saying that we should keep interest rates down to keep the exchange rate down? That was Nigel Lawson's policy in the late 1980s. Does he want a re-run of that? I really do not think so.
The right hon. Gentleman's second line of argument is that the Government's policies are worsening the business environment in the United Kingdom. He quotes a very big number for the increases in business taxes. I have looked carefully at that figure. I take very seriously any claim that we are unreasonably and inappropriately increasing the burden on British business and increasing costs unnecessarily, so I looked very carefully at how he reached such a gargantuan figure. I discovered that he mixed together the windfall tax, which was one off and restricted to the privatised utilities, with various other measures which either affect pension funds rather than companies or are measures to tackle tax avoidance, which I assume he would not wish to condone.
In fact, under the Labour Government, British business enjoys one of the most favourable tax regimes in the European Union. We have lowered corporation tax from 33 to 30 per cent. from April next year, and small business taxation from 23 to 20 per cent. That compares with tax rates of 41.6 per cent. in France, 37 per cent. in Italy and 35 per cent. in Spain. So the right hon. Gentleman's charge falls.
Our action on corporate tax rates and small firms' allowances will reduce companies' tax bills by about £4.5 billion over the lifetime of this Parliament. We have introduced a long-term capital gains tax rate of lop in the pound. All those measures, without exception, have been welcomed by business, because the reality is that new Labour means low business taxes—and long may that remain so.

Mr. Brian Cotter: The Secretary of State mentioned small businesses. I hear what he is saying about regulation. Would he be prepared to commit the Government to producing an annual report assessing the impact of regulation on small businesses? That would enable us to see whether what he says is true.

Mr. Mandelson: I take the hon. Gentleman's point seriously. I am glad to say that the Government's better regulation task force is about to embark on a close examination of the impact of regulation on small and medium enterprises—and not before time.
The right hon. Member for Wokingham misunderstands the thrust of the Government's policy on the application of social policy to business. It is to combine flexibility with decency. I am sorry that that is an alien concept to him. All seriously concerned and committed business people in this country support the idea.
The right hon. Gentleman ignored the offsetting benefits of the working time directive, which include higher productivity, reduced absenteeism and improved employment relations. What is more, it was agreed under the Tories. Would they campaign in Brussels—not that it would do them any good—for the repeal of the statutory


three weeks holiday a year for people in work in this country? Is that the policy of the Conservatives? Their silence is very telling.

Mr. Ian Bruce: rose

Mr. Mandelson: No, I am sorry. I want the official line from the official Conservative spokesman, not the provisional wing of the Conservative party.

Mr. Redwood: rose—

Mr. Mandelson: And here it is.

Mr. Redwood: The Secretary of State should remember that we asked for a debate on the issue. Unfortunately, he was obviously not interested enough to listen to what I said. I set out our position at great length, and produced a number of helpful suggestions to make it cheaper for businesses to implement the directive. Our criticism was directed particularly at the massive administrative cost. We do not think that it will help people on low incomes as much as it will create a massive bureaucracy. That is what the right hon. Gentleman should be addressing. I am sorry that he did not bother to read my remarks.

Mr. Mandelson: The right hon. Gentleman asked for a debate, and he got it. I want an answer to my question: would he repeal the directive? Does he believe that it would be right to deny people in this country a statutory three-week holiday a year? Is that so wrong? Is that so unacceptable?

Mr. Ian Bruce: rose—

Mr. Mandelson: No, I am sorry. I want the official Conservative party policy.
The welfare-to-work programme, which the Conservatives also attack, makes the labour market more flexible. [Interruption.] Hon. Members should just listen for a moment, and I shall explain. It creates greater flexibility by breaking down the barriers that trap people in long-term unemployment. It increases the supply of labour in the economy, its quality and its employability. That is the point of the new deal and other welfare-to-work measures. I am very sorry that the Conservatives are so short-sighted and narrow-minded that they cannot understand that our measures are helpful to flexibility and employability, and therefore helpful to the competitiveness and success of the British economy.

Mr. Brady: I am fascinated by the right hon. Gentleman's rather odd definition of flexibility. Which European economy does he consider to have the most flexible labour market?

Mr. Mandelson: Britain compares with the best in the European Union. Indeed, we exceed the flexibility of many other member states. We are determined to protect that, and build on it. The Conservatives refuse to accept that flexibility can be combined with decency and minimum standards for working people.
The Government's actions are designed to steer a stable course through the world's turbulence, and to offset the immediate repercussions. I have already said that I am saddened by any job loss, every family hit by unemployment, and every locality hit by closure. That is why we have taken steps to reduce the hurt, not by bailing out firms—of course not—but by providing training and employment opportunities for those affected by closures; by working with the companies concerned, such as Fujitsu and Siemens, to try to save jobs by finding new owners for the plants; and by targeting the areas most in need through the single regeneration budget, European funds and assistance to companies.
The Government have introduced a package of measures to provide immediate help for those affected by major redundancies. It includes rapid response teams to provide counselling, careers guidance and advice on retraining opportunities.
For example, in response to the closure in September of the Fujitsu plant near my town in County Durham, the Government are providing £625,000 from the rapid response fund for additional training resources. Already, 123 people have found new jobs, and 377 are engaged in training. That is action that could be expected of a Labour Government in the face of an economic downturn. We shall strengthen our programme of measures in the coming months wherever necessary.

Mr. Colin Breed: Siemens and Fujitsu received considerable grant assistance for setting up. Will some of that be repaid to go towards the retraining costs, the redundancy costs and all the costs involved in encouraging people and helping them back into work? Surely those companies should provide at least some contribution to those costs.

Mr. Mandelson: The hon. Gentleman touches on an important issue, which we need to keep under review as we assist Siemens to find a future buyer for that plant. If those efforts are not successful, the issue of repayment of the grant will arise. Siemens did not receive all the money, and the management has told the Government that the initial grant will be repaid, as is right.
We are doing a great deal. In each region, the single regeneration budget will provide support for areas affected by closures. Following the Chancellor's comprehensive spending review, the Government are allocating new funding to regional development agencies across the country over the next three years. In the context of the RDAs' regeneration activity, projects helping areas worst affected by closure will be treated as a priority.
That is important work. I ask all hon. Members to keep a sense of perspective in their understandable and real concerns about job losses. There is certainly no comparison between the conditions we face today and those during the recession which was manufactured by the Tories in 1990.
The right hon. Member for Wokingham called this debate to paint a picture of doom and gloom across the country. I know that the CBI regional trends survey talks of falling optimism, but let us look at just some of the


facts and the picture across the country. In the eastern region, there has been a net gain of nearly 11,000 jobs over the past four weeks.

Mr. Bob Russell: Will the right hon. Gentleman give way?

Mr. Mandelson: I should like to develop this passage of my speech.
In the east midlands, there has been a net gain of more than 1,600 jobs over the past four weeks. In the north-west, there has been a net gain of nearly 2,500 jobs over the past four weeks–300 new jobs at Zeneca Pharmaceuticals in Cheshire, and 1,000 new jobs at the Vauxhall car plant in Ellesmere Port.
In the north-east as well, there has been a net gain of nearly 500 jobs over the past four weeks–200 new jobs in ship repair at A and P Appledore in Wallsend only last week. In Scotland, there has been a net gain of nearly 4,000 jobs over the past four weeks–270 new jobs at Seagate microelectronics, and 1,000 new jobs in new Virgin Trains call centres. In London, almost 1,900 new jobs have been created since the beginning of the financial year.
I am not saying that the picture is not mixed: of course it is. [HON. MEMBERS: "Ah."] Only a Tory Member of Parliament, trying to make political capital, could ignore the simple fact that the British economy is still creating more jobs than it is losing: more than 400,000 since May 1997. Indeed, it is still growing, albeit modestly.

Mr. Redwood: Before the Secretary of State concludes his remarks, will he answer the questions that I have asked him in the motion, which I worded, and in the letter that I sent him in advance so that he had plenty of warning to research his answers? The House and industry needs to know which of the many public policy recommendations in the McKinsey report he and his colleagues will implement; otherwise, business will be mired in uncertainty, making its task even more difficult.

Mr. Mandelson: I have already responded to the right hon. Gentleman about his letter on milk quotas, new hotels and the like—questions on all of which are perfectly important and serious. They will, of course, receive a serious and considered reply in due course. That is exactly what he would expect.
I have not yet finished my speech—the right hon. Gentleman will be disappointed to hear—because I want to make the point that not only do this Government have a good record in job creation, but we continue to attract record levels of inward investment. We are still, this year, leading the way in Europe. If the Tory analysis were right, surely investors would be turning their backs on us. The facts show otherwise.
A report from the United Nations, which will be out tomorrow, will show that the UK received substantially increased inward investment flows last year. Our share of EU investment rose to 34 per cent., compared with 28 per cent. in 1996. Over recent months—this is very important—the case load of the Invest in Britain Bureau has risen by 10 per cent. compared with the same period last year. That is a significant and reassuring development. I notice that it has not been cheered by the

Opposition—it is, of course, bad news for them. What is good for the British economy is obviously bad news for the Conservative party.

Mr. Leigh: rose—

Mr. Mandelson: No, I am afraid that the hon. Gentleman is too late. He had his chance to cheer.
In the concluding part of my speech, I want to talk about the future. To emerge with strength from what is without doubt a very difficult period for the British economy, we need to continue to attract high-quality overseas investment. We are far from complacent; there is a always a great deal more for us to do to attract high-quality inward investment. In addition to inward investment, we must bolster Britain's supply of home-grown productive capacity and competitiveness. That task is certainly equal to coping with the short-term problems brought about by the global downturn.
Our predecessors had no such ambition or creative vision. They specialised only in destruction—of industries, jobs, regions. Of course things needed to change in British industry and the economy. The problem was that their policies failed to support the creation of successful British businesses, with expanding numbers of jobs rooted firmly in the UK. They failed to bring Britain into the fresh industrial revolution—the revolution of the new knowledge age. That is the challenge that I have set for my Department.

Mr. Redwood: Claptrap.

Mr. Mandelson: The right hon. Gentleman says, "Claptrap." What world is he living in?

Mr. Redwood: Will the Secretary of State give way?

Mr. Mandelson: No. The right hon. Gentleman does not realise that the generation, harnessing and application of knowledge is the sole source of comparative advantage in our economy.

Mr. Redwood: indicated dissent.

Mr. Mandelson: He says that that is rubbish. We do not want any more of his rubbish. We need knowledge applied throughout the British economy. The theme of the White Paper that I shall publish next month will be to equip Britain to succeed in the knowledge-driven economy.
We are already world leaders in some of the most advanced sectors of the economy, such as computer games and biotechnology. [HON. MEMBERS: "Ah."] That is not a result of what your Government did—

Mr. Deputy Speaker: Order. It is not my Government.

Mr. Mandelson: That is as a result not of the Conservative Government, but of what entrepreneurs and business people did for themselves. They are the ones to be credited with the success of the computer games and biotechnology industries—not the Tories. The problem is that no big British business has grown out of those sectors—no Microsoft, no C1SCO, and not even a


software house such as SAP in Germany. Once upon a time, we grew such companies—and not just through mergers. I want this country to do so again.
We shall see, too, firms in traditional sectors innovating constantly—not just sunrise and new technology companies. Mature industries and companies must apply knowledge, innovation and imagination to what they do just as much as everyone else, in order to improve production and processes, and to keep and grow their market share.
There are some important success stories in Britain in our pharmaceutical and aerospace industries, but too many firms are just not innovative enough. They do not spend enough on research and development to generate knowledge. They do not put enough into skills. I want innovation to be the watchword of all business in Britain. How we achieve that has already been touched on in the pre-Budget report, and will be addressed further in the White Paper, although I can say that we shall succeed only if we create open, competitive markets in which British companies can compete, thrive and achieve rising market shares.
We shall succeed only if we create and exploit knowledge, including our science base, upgrade skills, spread knowledge of best practice—to help businesses learn from other British businesses so that best practice can flow throughout the economy and there can be lasting improvement is as important a job for the Department of Trade and Industry and the Government as any—and, above all, help entrepreneurship to thrive once again, harnessing through enterprise the best of Britain's brilliant record in scientific discovery.
That is why the Government will invest to give our entrepreneurs the knowledge with which to work, why we are putting £1 billion into British science, and why we shall forge better links between our universities and businesses, so that new enterprises and businesses spin off, and we excel not just in scientific discovery but in scientific enterprise and business. That is the challenge facing us.
Amid all the undoubted pressures on British business, it is vital to realise that it is possible to talk ourselves into a greater slowdown than is necessary. That is what we have heard from the Conservatives this afternoon. They must understand that, for perfectly understandable reasons, confidence in many British businesses is fragile. [HON. MEMBERS: "Ah."] That is a lesson for us all to heed, not only those of us in government.
However, I am afraid that today's Tories do not have the guts or the integrity, when they start talking about the British economy and the prospects for British business, and as they indulge themselves in their doom-laden language, to act on the recognition that they, too, have a responsibility. That is why their motion is unworthy, self-serving and a discredit to them. It deserves to be rejected by the whole House.

Mr. David Chidgey: At least until the last couple of minutes, I was beginning to agree with the Secretary of State in his aspirations for the future of our economy—including our manufacturing industry, which

is the subject of the motion. However, I am afraid that some of what he said much earlier I also did not find convincing.
The right hon. Gentleman made great play of the need to avoid talking down the British economy, and I agree that we should have confidence in our economy and in our work force. However, when he commented on the forecasts that he had seen concerning whether we were going into recession, he was careful to speak in terms of "the economy". I agree that the economy is not going into recession—but the debate is about manufacturing industry, and that is a different story.
I am not here to talk down manufacturing industry for any political advantage. I am talking about it because I am concerned about it, and I have to say that an incredible degree of complacency has been shown towards the crisis that it faces. If we do not recognise that crisis, how can we start to help?
Why are the Secretary of State and the Chancellor of the Exchequer so confident that manufacturing industry can avoid recession next year, when almost every other analyst forecasts such a sharp fall in output? I am sure that the Secretary of State knows that every month the Treasury contacts 29 City analysts and forecasters to find a private sector consensus on the economic forecast for the following month.
Is the Secretary of State aware that, after last week's pre-Budget report, my colleagues contacted all 29 of those analysts to establish their latest consensus on GDP growth and manufacturing output growth? The consensus forecast for manufacturing output growth next year was minus 1.2 per cent. Whether we like it or not, and whether we are trying to boost our manufacturers or not, the forecast is for a manufacturing recession. We should be aware of that, and take measures to try to ameliorate or even avoid it.
The Treasury uses the same forecasters—the ones who are forecasting minus 1.2 per cent. growth—so where did the Treasury dream up its forecast of zero growth next year, which carefully avoids slipping into the negative? That is not good enough.
It is interesting to note the response of the private sector and the City analysts. The Hong Kong and Shanghai bank says that the Chancellor's expectation that output will dip only to zero in 1999 is
so far out of line with the survey evidence on the sector that it is barely credible".
I heard what the Secretary of State said about the latest CBI survey, but we should still listen to what the CBI says, because its survey takes place across industry as a whole; it is not made to prove any particular debating point. The latest CBI survey underlines the crisis. According to the Deutsche bank, the results of that survey were "truly awful".
No wonder the survey is truly awful if exports are falling at the fastest rate since measurement in volume terms began. No wonder, if output is falling so much more rapidly than expected, at the sharpest rate for more than seven years—

Mr. Ian Bruce: Will the hon. Gentleman give way?

Mr. Chidgey: I shall make a few more points first.


Even more worryingly, the fall in domestic orders has been the greatest on record since 1992. We used to worry about skill shortages, but with manufacturing heading for recession, restraints on output due to shortage of skilled labour are at their lowest level for four and a half years.

Mr. Bruce: The Government misunderstand why we are so passionate in trying to tell them that they have got their statistics wrong. I do not know whether the hon. Gentleman was in the House when we last went into recession, but many of us will remember going as Back-Bench Members to see Ministers and tell them that businesses knew that business was going into recession, even when the Treasury statistics said that it was not and that everything was fine. The position is not exactly the same now, because there has been a change of Government, but the Treasury and its statisticians are still the same.

Mr. Chidgey: The hon. Gentleman may be interested to hear that I was, I believe, employed in the construction industry at the time to which he refers. I won a by-election, which, as he will know, is not a recipe for continued employment in this place. None the less, I remember saying when I won my seat in Parliament, during that recession, that as a by-election winner I was glad to have a safer job than before. That made the point to my colleagues in the construction industry.
The last time that the CBI quarterly industrial trends survey was as negative as it is now was in 1981, when manufacturing output was falling at 5 per cent. per annum.
I am not trying to talk down British industry. I am proud of what my colleagues in industry have managed to achieve over the centuries and will continue to achieve in the future. However, if we do not recognise the problem we cannot start to provide solutions.
The net result of the slump, and of the Government's failure to act decisively to stabilise the economy and to improve the climate for business, is the forecast of minus 1.2 per cent. growth. If that trend goes further, we could see 400,000 job losses in the next two years.
I would not wish that on any Government, let alone on the individuals who will suffer from it—but that is what we face, and that prospect is what we must address if we are to improve conditions for British industry. Manufacturing industry is now in a life-and-death struggle. Over the past 20 years, employment in manufacturing industry has dropped from 7 million to about 4 million. If that goes on, as the forecast trend suggests, it will drop to 3.5 million in two years.
The Government have to ask themselves how close, if that happens, Britain's manufacturing industry will be to falling below the critical mass that we need to maintain ourselves as an international manufacturing base. How long would it be before Britain no longer had the manufacturing capacity, the resources or the skills to compete with the major players in the global market?
It is a long time since this country was a major manufacturer of machine tools. I am sure that other hon. Members too, get frustrated when they go round factories and see that every machine tool is manufactured in Germany, Switzerland or anywhere else but in Great Britain. We led the world in industrialisation.

Mr. Tim Boswell: rose—

Mr. Chidgey: May I finish my point?
I could name a host of manufacturing products which have disappeared from the list of products made in this country. Wind farms are one of the greatest ideas for capturing energy resources and developing sustainable energy, yet people who try to buy equipment to build a wind farm in this country find that it is all made elsewhere. We do not even manufacture windmills to augment our energy resources.

Mr. Boswell: The hon. Gentleman is making a characteristically thoughtful speech. Does he acknowledge that at least half the machine tool use in this country is still represented by home production, and that major machine tool manufacturers such as Germany and Japan also have a lively import trade because there is much exchange of technology and specialisation in that sector?

Mr. Chidgey: I am heartened to hear that; at least all is not lost. My concern, however, is that we are on the verge of losing all that.
The Secretary of State was quick to follow the Government line of blaming the global economic downturn for the problems that our manufacturing industry faces. The collapse of the Asian markets was mentioned, and the right hon. Gentleman was quick to blame low productivity and poor management for our problems.
The reality is that the collapse of the economies of south-east Asia, Latin America and Russia has had little effect on UK exports. We export more to the Netherlands than we do to south-east Asia, Latin America and Russia put together. In reality, UK manufacturing export markets are predicted to grow. Tables A2 and A5 of the Chancellor's pre-Budget report show that, over the next four years, UK manufacturing export markets should grow at an average rate of 7 per cent. a year. That is our export markets—not the global economy. My concern is that Britain's exports to those markets will grow by only 4 per cent. Why are we taking up only half the opportunities that exist in those growing markets? I ask the Secretary of State to accept the Chancellor's figures.
The reason why we are not capturing those markets or penetrating them as much as we should is the overvalued pound. That is an old cry, and Government Back Benchers will try to drown out that point of view. However, the Secretary of State must agree with his Treasury colleagues that since the Government came into office, sterling has lost more than 10 per cent. of its competitiveness. That has had a direct bearing on how well we can succeed in our export markets for manufactured goods.
Will the Secretary of State accept the acknowledgement in the pre-Budget report that, over the next year or so, the effects of the pound's overvaluation will work its way through into our manufacturing economy in the form of lost orders and lost jobs? Both the high pound and high interest rates are a direct result of the Government's failure to rebalance economic policy.
While businesses are calling for a clear statement on where the Government stand on the single currency, the Government seem content to kick the matter into the long grass—to use a phrase which has become fairly current recently. [Interruption.] Government Back Benchers may criticise, but this matter is very important to manufacturing industry. Businesses need clear guidelines.


The Cabinet seem to be engaged in a curious dance around the issue. The Secretary of State is reported to have said, "When we join the single currency." Then, quick as a flash, the Government enforcer said, "If we join the single currency." Some Ministers say "in", others say "out". It is, "In, out, in, out, shake it all about"—new Labour, new hokey-cokey.
Industry needs a decision. Firms want clear guidance. It is not good enough to stand on the sidelines, watching the game, saying, "If the play is going our way, we might join in." By that time, the game will have moved on, and we will be left for ever on the sidelines in the reserve team. That is not good enough. If the Government are serious about helping manufacturing industry overcome the approaching crisis, they must make a statement of intent. They must set out a clear programme for a referendum and clear proposals for what they intend to do about the joining date for the single currency.
Even if the Government made a statement of intent—and that would be weak enough—it is generally accepted that the process would still take three years. No one in British industry will start to make the preparations and investment that will be needed unless they have clear guidelines.
The Government need not only to try to avert the immediate crisis facing manufacturing industry—and the forecast of hundreds of thousands of job losses—but to address long-term practices. I was interested to hear the remarks of the Secretary of State about how he intends to set up some initiatives to try to improve the skills base of the country, and his response to the suggestions in the McKinsey report. Chapter 3 of the pre-Budget report, on productivity, sets out the problems clearly, and I agree with most of the analysis. However, I find trouble with the proposed solutions. The Government show clear signs of tinkering around the edges and covering the whole lot up with a large dollop of waffle. I want some clear ideas.
The Government are proposing tax breaks for research and development. The Secretary of State may, however, be aware that the Institute of Fiscal Studies has said that such broad tax initiatives are rarely, if ever, able to achieve their objectives. Does the Secretary of State agree that targeting assistance to small, start-up firms—the sort of firms that he was describing—would be far more effective than a broad-brush approach across the whole sector?
Does the Secretary of State agree that the proposed broad-brush tax breaks are a drop in the ocean compared to the extra taxes imposed on business? I do not wish to follow the Conservative party's line of claiming that every measure to try to improve conditions in the workplace should by definition be abandoned. The Secretary of State knows that I do not believe that. Let us be fair and honest, however. When we talk about taxes and tax relief on business, the right hon. Gentleman should know that the money that business is saving through cuts in corporation tax amounts to only about half the additional direct taxes that the Government have placed on business since they have been in office.
Does the Secretary of State accept the view in the McKinsey report that the major causes of poor productivity are not necessarily poor skills and low investment? The report suggests that those factors could

be effects rather than the root cause. I should be interested to know the Government's response. If the Secretary of State accepts that the root cause of industry's problems is the need for modern commercial regulations which remove from businesses all the barriers that prevent them from adopting best practice—of which he is in favour—he has a responsibility to make sure that the Government strip away the bureaucracy that is stopping British companies performing at their best.
Combining the pre-Budget report with the McKinsey report produces some interesting concepts of what could be done, and of what is not being done. The pre-Budget report put great emphasis on education and training. Who would argue with that? Liberal Democrats have long argued for the need for long-term investment in high-quality education and training for all those under 19.

Mr. Bercow: And for themselves.

Mr. Chidgey: From a sedentary position, the hon. Member for Buckingham (Mr. Bercow) clearly demonstrates that he has need of further training himself.
The pre-Budget report sets out plans for the long term. However, even if the Government provided the funds for those plans to work, it would take a generation before we started to reap the benefits in manufacturing industry. The crisis is now. The interesting thing is that we have a pool of skilled labour facing unemployment—up to perhaps 400,000 people in the next two years. Surely those people should be first in the queue for investment in up-skilling and retraining.
I was pleased to hear the Secretary of State refer to the work that he is overseeing on the rapid response fund and the single regeneration grants—and I think he said that the regional development agencies would get extra money. However, the infrastructure, the bureaucracy, the training and enterprise councils and the training budgets should be much more sharply focused, so that high-quality training can be provided to those people who are losing their jobs now. If the Government take the action that they should, and there is an upturn in manufacturing industry, those people—with a proven record as good employees—will get back into work and will be ready to do their jobs, putting British industry back on the map, where it belongs.

Mr. David Borrow: This has been an interesting debate.
On a general point, we must judge the Opposition's motion against their record in government and their policies for the future to decide whether the two match and whether they could improve on the policies that the present Government advocate.
British manufacturing industry faces three difficulties. First, we are in the downturn of the business cycle. We cannot do away with that cycle, but the art and trick of economic management is to ensure that the peaks are not too high and that the troughs are not too low, so giving businesses the long-term confidence and stability to invest in the future.
The second problem, which is peculiar to British manufacturing, is that, although we have many first-class manufacturing companies which can compete with the


best in the world in terms of productivity, performance and quality, we also have a long tail of companies that have not yet reached world class. Part of the job of government is to assist in the preparation and development of those companies to make them world-class performers. In the past few years, the difficult exchange rate has exposed such companies' weaknesses and it has been more difficult for them to compete internationally.
Thirdly, we must not forget the extent to which specific sectors of the economy have been hit by the recession in the far east—they have lost both markets and competitiveness. Many job losses in the north-east have little to do with the first two factors but a great deal to do with the downturn and recession in the far east, and we must be realistic about that.
I am not an expert on manufacturing industry, but during my time as a Member of Parliament I have tried to get in touch with businesses in my constituency. I can compare the performance of the previous Government with that of the present Government by dealing with a number of local companies and with what is happening in my part of central Lancashire. I mentioned earlier the problems of Leyland Trucks. In the early 1990s, the company, which was then owned by DAF, went into receivership. Leyland's 100-year history of truck manufacture nearly went down the pan.
According to the local papers, my predecessor as Member of Parliament seemed more concerned about the performance of England's cricket team than about retaining those jobs in Leyland. The company was preserved, largely owing to assistance from Lancashire county council—which was then led by my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman)— through Lancashire Enterprise, which put together a package. The company brought in new production methods. It has now been taken over by Paccar—an American company which also owns DAF—and production of 4,500 trucks a year has been transferred from Holland and Belgium to my constituency. At the time of the crash in the early 1990s, the company employed 500, but it now provides about 750 jobs, and the figure will increase to more than 1,000 with new truck production. Those jobs have been clawed back and transferred because the company has developed a world-class competitive base and has been able to compete with Europe.
The aerospace industry, with its factories in Warton and Salmesbury, is the major employer in my constituency, even though the factories are not based there. I visited Farnborough this year and am a member of the parliamentary forum of the Society of British Aerospace Companies Ltd., which develops close links with parliamentarians. Clearly, our aerospace industry is enjoying a period of great success. The Department of Trade and Industry and the Government are playing a key role in forging the consolidation of that industry throughout Europe, which is crucial if the industry in Britain is to provide jobs for future generations. That is one way in which our Government can be and are being proactive.
More jobs are also being created in my constituency as a result. A few weeks ago, British Aerospace announced that it would transfer the production of Airbus parts from the Salmesbury plant to Scotland to make room for the

increased production of military aircraft at Salmesbury—in particular, Eurofighter, which is soon to go into production.
There are clear signs, however, of a skills shortage in the skilled engineering industry in central Lancashire. The local authorities and the training and enterprise council need to put in place packages to ensure that the skills base is there for the future to support the aerospace industry and the chain of small and medium enterprises that supply it.
On a different tack, Schwan's pizzas—an American company—is one of the major employers in my constituency, with 700 employees. I presented awards to members of staff at one of its gatherings earlier this year. At the time, the company was talking about changes in production and the possible closure of a plant in the south-west. I bumped into the managing director at a business awards ceremony a few weeks ago at the University of Central Lancashire and asked how things were going, expecting that if all the tales we were hearing about recession were true, he would be talking about laying people off. In fact, the factory in the south-west had not closed because demand was so high, and he had taken on additional staff in Leyland to meet production targets. Those may only be straws in the wind, but the picture of universal recession in manufacturing is not justified for all locations.
Since the general election, I have met South Ribble business leaders every three months at business breakfasts. I also have regular meetings with the Central and West Lancashire chamber of commerce. Indeed, I attended a meeting there last Friday. Again and again at those meetings, people have expressed concern about interest rates—the reduction last week was welcome—and exchange rates. We recognise that the exchange rate against European currencies is lower than it was at the time of the general election, but there are still problems in markets in the far east. Businesses in my constituency want stability. People have pointed out to me that interest rates increased from 5 per cent. at the general election to a peak of 7.5 per cent., but they are now down to 6.75 per cent., which is a favourable rate compared with the 15 per cent. that we had for a year in the early 1990s. We have not seen the big swings that took place under the previous Administration.
Business men are concerned about bureaucracy and the amount of paperwork facing small businesses. Some movement and change is necessary there. The important thing is that this Government will listen. The figures that the Secretary of State outlined at the beginning of the debate show that even though the Conservative party talks about doing away with regulation, they introduced more than they got rid of. Small businesses appreciate that fact.

Mr. Bercow: The hon. Gentleman is making a considered speech and we are all listening with interest and courtesy, but I must pick him up on the point about regulation. Will he at least acknowledge the factual position, which is that in the last two and a half years of the previous Government—after enactment of the Deregulation and Contracting Out Act 1994—there were 37 deregulation orders, whereas in the first 18 months of this Government, there have been only five?

Mr. Borrow: I shall not argue with the hon. Gentleman's statistics, but the business leaders to whom


I have spoken did not see the previous Administration as being supportive in getting rid of regulation. I can only give the House my own impression.
As regards regional development policy, it is important to recognise that the economies of different parts of the United Kingdom operate differently. I have been greatly encouraged to see the communities of Preston, South Ribble and Chorley come together in a public-private sector partnership to develop the Central Lancashire development agency, with a view to working with the regional development agency for the north-west when it is established next year to develop an economic policy for central Lancashire. I am a CLDA board member, and I was encouraged at last Friday's meeting to see the way in which the business community and the private sector are working together to bring jobs to the area.
Two major sites in central Lancashire are primed for economic development. One—the former Royal Ordnance site—sits largely in the constituency of my hon. Friend the Member for Chorley (Mr. Hoyle). The second is in my own constituency, at Bamber Bridge. Both sites could provide thousands of jobs, and the community wants them to be developed to provide well-paid and highly skilled jobs. One benefit of having a development agency is that the community can have its say and play its role in the development of economic policy. Matters are not then driven entirely by market forces and by whoever buys the land for ad hoc development.
Problems exist for manufacturing industry. In speaking with members of the business community, I have heard that companies are looking through their order books and considering what is going into their banks. The feeling that there may be a huge recession round the corner is causing companies with good order books and sound businesses to fall into the danger of putting off investment and spending decisions. That feeling that conditions may turn down rapidly is not justified by the facts, but we must recognise the scale of the problem if we are to handle the downturn and the problems that have resulted from the collapse of the far east economies, the business cycle and the competitiveness of UK manufacturing industry, particularly in relation to our European competitors. We must be carried away neither by complacency nor by pessimism.
I shall conclude with a comment on Conservative policies, particularly the Conservative policy on Europe. I have yet to attend a meeting with business leaders at which there has been a groundswell of opinion in favour of our not joining the European single currency. The message that comes to me frequently, particularly from manufacturing industry, is that single currency membership should come sooner rather than later. That would make it easier for our businesses to operate, and to compete.

Miss Julie Kirkbride: I am glad to be able to speak in an important debate, and I congratulate my colleagues on the Front Bench on obtaining a debate on manufacturing industry and factory closures. I was extremely disappointed by the arrogant—some might say sneering—response of the Secretary of State to the legitimate concerns that have been raised. Manufacturing

and factory closures are particularly important to the west midlands. I am disappointed not to see a single Labour Member from my part of the world listening to the debate. Nor has any Member from Birmingham been here to make a point about the grave concerns facing manufacturing industry in the west midlands.
A small part of Rover's Longbridge plant is situated in Bromsgrove, and the rest of it is in the constituency of the hon. Member for Birmingham, Northfield (Mr. Burden), which borders mine. Some 14,000 people are employed at Longbridge, and 40,000 further jobs across the west midlands would be at risk if the plant were to close. Sadly, difficulties at Longbridge mean that 50 supply industry jobs in Bromsgrove—at UEF, which hon. Members may remember under its former and more famous name of Garringtons—have already gone because of the problems created for manufacturing industry by the Government's economic policy.
Some 1,500 jobs were cut at Longbridge in the summer when people on short-term contracts were told that the contracts would not be renewed. It will be a miserable Christmas for many of my constituents, because they have been put on short-time working, and their so-called Christmas holiday will be extended to keep them away from work. BMW management say that 25 per cent. of components for Longbridge should in future be outsourced abroad rather than in the west midlands, at an estimated saving of £250 million.
On top of that, there is the Mini. We were all looking forward to the relaunch of the Mini at its historic home at Longbridge, but the relaunch is in jeopardy as the car may be made at Rover's Cowley plant instead. The bottom line is that the Government have been told by BMW's management that they have until the end of November to come up with a scheme to ensure that Longbridge is not run down or discontinued. They have until then to ensure that the plant has a safe long-term future, a future that is in the interests of all of us, but particularly in the interests of my constituents.
It is legitimate to ask how we came to that position. How did our great flagship plant come to face such difficulties? It is a shame that the Chancellor is not obliged to appear this evening, for it was he who blamed the Longbridge workers for their situation, telling them that they were not productive enough. He said that it was their fault that the plant faced the terrible prospect of closure. The Chancellor's remarks were deeply offensive and hurtful following the great strides taken by workers at the Longbridge Rover plant. The days of Red Robbo under an old Labour Government in the 1970s have been left far behind. The work force have vastly improved their working practices, showing great willingness to protect their jobs by working in a modern market.
It is not true to say, as the Government do, that the workers are to blame and that productivity is the problem. It is not comparing like with like to say that Nissan workers in Sunderland have created the most efficient car plant in the country, with 98 cars per worker, while Rover's productivity is much lower, at 33 cars per worker. Nissan has a purpose-built plant on a green-field site with the most efficient and modern equipment, which produces the most efficient output possible. The Longbridge plant has existed for many decades. It is a distinctive brown-field site, situated on three little hills. Therefore,


the two cannot possibly be compared and it cannot be said that it is purely the workers' fault that productivity is so low.

Mr. Ian Bruce: My hon. Friend may not know that the all-party motor group visited Land Rover at Solihull. I think that both sides of the House acknowledge—certainly the previous Secretary of State opened it—that that is probably among the most modern plants in Europe, if not the world. I wrote privately to the then Secretary of State about that plant's concern at the way in which the economy was being managed. The pound and interest rates were much too high and its German owners had said that it would not continue with the expansion and would have to start cutting back. That shows that it is nonsense to blame the lack of productivity at Longbridge for its problems.

Miss Kirkbride: My hon. Friend makes the point to which I wanted to come. The problem is not one of productivity alone. Workers and management understand that productivity must be addressed. The Government acknowledge that, but, most unfairly, blame productivity for the problems at Longbridge. The crisis in the Longbridge car plant is the result of the Government's management of the economy. The high pound and the high exchange rate created the present difficulties.

Maria Eagle: I have the front gate of a car plant, although not the plant itself, in my constituency—Ford at Halewood—and Vauxhall is at Ellesmere Port in the north-west. Both are old car plants which are now expanding vastly. How does the hon. Lady explain the difference between what is happening at Longbridge and what is happening at Halewood and Ellesmere Port?

Miss Kirkbride: I am glad that the hon. Lady has raised those issues. If she will forgive me, rather than give a direct answer now I shall address those points in my speech; the House will understand my speech better if I am allowed to deal with those points in the order that I see fit.
The Longbridge plant suffered particularly from the high exchange rate resulting from the Government's decision to make an independent Bank of England which misjudged the rate at which interest rates should be set because it was not capable of knowing the Government's wider economic policy. Interest rates were kept too high for too long with the result that the pound shot through the DM3 ceiling, which I cannot remember its reaching before. For some time the pound reached a completely unacceptable level for manufacturing industry.
Earlier this spring the Longbridge plant was able to hedge its currency transactions. It had bought forward at an exchange rate of DM2.40 to the pound. Sadly, that arrangement came to an end just when the Government's exchange rate policy meant that there were over DM3 to the pound. The effect of that was that the price of the Rover 400 made at Longbridge shot up in Germany from DM29,000 to DM39,000, vastly overpricing that car in the German market, with the result that Rover exports completely collapsed.
At the same time, Rover faced difficulties in its home market. Because the pound was so high, resulting in cars coming from abroad at a much cheaper rate than had

previously been experienced, the British car market was flooded with Italian, French and German cars, which, because of aggressive marketing, could be sold more cheaply in Britain. Other European companies were looking for somewhere to sell their cars because, as a result of the collapse in Asia, they were not able to sell their cars in the same volume in that market. They looked to our market which provided easy pickings because of the Government's exchange rate policy. As a result, by the end of this year, BMW will face a £600 million loss at the Longbridge plant.

Mr. Hoyle: What the hon. Lady says does not quite add up, because Rover cars are 30 per cent. cheaper in Europe than in the United Kingdom, and, in fairness, French cars coming to Britain are up to 40 per cent. dearer than in their own market. Therefore, I cannot see the logic of what she is saying. Is she looking for a cash investment for Longbridge from the Government? Is that what is needed?

Miss Kirkbride: I am sure that the hon. Gentleman is only making a debating point and that he really does know that every home market has its own considerations and, sadly, the price of cars on the continent does not necessarily impact on the price of cars here. Like must be compared with like, and a DM10,000 increase on Rover cars in the German market would clearly cause a major problem for BMW when it tried to sell the Rover 400 in that market.
The hon. Gentleman rightly asks what should be done. The first point, which I hope will not be lost on the Minister, is that the Government's economic policy has some bearing on the situation. I notice that, for all the protestations that the Bank of England is independent, Treasury Ministers at least have recently asked it to listen to their pleas for a reduction in interest rates which, to the satisfaction of the House, is what we had last week.

Mr. Leslie: Would the hon. Lady suggest that independence for the Bank of England be scrapped?

Miss Kirkbride: It is difficult to say that the Bank of England is truly independent when members of the Monetary Policy Committee are appointed by the Government on relatively short-term contracts. Independence is not as clear cut as it might be in America and Germany. However, that is something of a red herring when we are discussing the real issue of my constituents' jobs at the Longbridge car plant.
The biggest problem facing Longbridge is where to go from here. It is clear that the unions have shown their willingness to co-operate in any way that they can to make those jobs as secure as possible, and I congratulate them on that. Although criticisms have been made of the BMW management they are rather unfair. BMW has invested £2.5 billion in the Rover car industry in the United Kingdom since it took it over. Land Rover has been a great success. The Cowley car plant is clearly doing better than Longbridge. BMW has shown itself willing to invest in the production of the new Rover 75, which had a fabulous reception at the motor show until the management acknowledged the difficulties at Longbridge. That clearly has put rather a damper on things.
The success of the Rover 75 needs to be reflected in other new models that can be built alongside the Mini at the Longbridge plant if the jobs of my constituents are to


be secure. To that extent, I come back to the point made by the hon. Member for Liverpool, Garston (Maria Eagle). I think that I am right in saying that, earlier this year, £43 million was given to the Ford plant at Halewood. Similarly, Vauxhall has had money through restructuring grants in order to improve its productivity and its production plant. Conservative Members, and, I hope, Labour Members, do not want to go back to the situation whereby good money was poured after bad into plants that would never be productive and which could never be a success story for British industry.
Where there is willingness to invest in new models and new plant, DTI grants are available which could help BMW to restructure and to provide jobs and security at Longbridge. When will the Government talk to the BMW management in order to secure those jobs? When will the amount of money that is available within the framework of DTI grants be negotiated with the BMW management so that we can all feel that there is not just a more secure Christmas ahead of us but a secure new year and a secure 2000 and beyond for the Longbridge Rover car plant? I should be grateful if the Minister would respond to the concerns that I have raised, and if her boss would respond to them before the 30 November deadline.

Maria Eagle: I am grateful for the opportunity to contribute to this important debate. The Opposition motion before the House condemns
the Government's failure to take urgent action to give manufacturing a chance".
It is interesting that the Opposition now want to give manufacturing a chance. I believe in judging people by what they do as well as by what they say. In that context, it is important to look at the record. The right hon. Member for Wokingham (Mr. Redwood) made clear his view that mistakes were made at the time of the recession in the early 1990s. Although he was in government at the time, he hinted that he had not agreed with the then policies and had taken action behind the scenes—to the extent that a Minister can while retaining collective responsibility—to try to change them.
My memory of the previous Administration goes back a little further than 1990, to 1979. There was not just one major world recession which the previous Government's policies made worse than it need have been; there were two. The first was between 1979 and the early 1980s, and I shall concentrate on the period between 1979 and 1981. The Opposition motion condemns
the continued spate of factory closures".
The previous Administration were not content with closing factories; they shut down entire industries. They were not concerned with a factory here or there, but closed most of our shipbuilding and steel industries and almost all of our mining industry.
Within 18 months of coming to power, the Conservatives had managed to close more than 20 per cent. of our manufacturing industry. It did not happen uniformly across Britain but affected some constituencies more than others. Although I did not represent my constituency at the time, I was watching closely what happened in my city of Liverpool. The previous Government closed most of the automotive factories in

my constituency, including Dunlop and Triumph—Ford managed to survive the shock, thank goodness—and the matchmaking factories. They closed 25 per cent. of Liverpool's manufacturing industry within 18 months of coming to office. Is that what the motion means by giving manufacturing a chance? It is not my definition.
When studying a Government's record, one must also look at their general election manifestos. Given the absolute devastation that had been visited on Liverpool, particularly on its manufacturing capacity, I looked at the 1983 Conservative election manifesto and at what they claimed they had done. I noticed with interest that the years 1979–81 were missing from the statistics. One would have thought that the Conservatives had first been elected in 1981. The result was that all the lines on the graph went up instead of down.
The Opposition have been working at collective amnesia for years. It is not new to them. They have got it down to a fine art in the motion before us. They appear to forget that they gave manufacturing no chance when they were in power, when they had the opportunity to do so.

Mr. Hayes: It is most interesting to hear a history lesson, but if the hon. Lady is so interested in manifestos, I refer her to the Labour party manifesto, which talks about improving chances for businesses, boosting employment and giving business more support. How does she reconcile that with recent job losses, closures and ever greater regulation on businesses of all sizes?

Maria Eagle: I shall go on to answer those points. I am aware that the hon. Gentleman does not want Labour Members to deal with history. Indeed, the right hon. Member for Wokingham made that very point in his speech and tried to pre-empt any reference to history by Labour Members. The previous Government's 18-year record needs to be looked at, given what they are calling on the Government to do. The hon. Gentleman will admit that 18 months is not as long as 18 years. The time will come—at the next general election—when the people of this country can judge this Government on their record. There are already welcome signs that the Government are taking more heed of the needs of manufacturing and employment—of individuals seeking employment and those who need to shift from job to job and industry to industry—than the previous Government did during 18 years in office.
The Government's amendment recognises the fact that it was not just in my constituency that manufacturing jobs were destroyed under the previous Administration: 2.75 million manufacturing jobs were destroyed during that period. The Opposition may not want to be reminded of that record, but it is relevant to the debate.

Mr. Brady: The hon. Lady has laboured the point that Conservative Members do not want to discuss history. Is it not more important to discuss what our constituents and people throughout the north of England want to hear about—what the Government will do to stop factory closures and job losses? She is perfectly entitled to raise issues of history, but she would be well advised to focus on what people outside want to hear.

Maria Eagle: My hon. Friend the Minister for Small Firms, Trade and Industry will deal with those points


when she winds up the debate. I have only about 10 minutes, which is not enough time to go into much detail.

Mr. Bercow: The hon. Lady is subcontracting.

Maria Eagle: Back Benchers cannot subcontract to Ministers. I have less time than my hon. Friend the Minister to answer the point raised by the hon. Member for Altrincham and Sale, West (Mr. Brady). I simply seek to discuss the Opposition motion, which finally
urges the Government to change policy before more jobs are lost.
I was listening carefully to the initial remarks by the right hon. Member for Wokingham, which were extensive, to hear precisely what the Opposition's policy prescriptions were, but I heard not one suggestion. We should be told in a little more detail what policy changes the Opposition would suggest to put the problems right. Given their extensive experience of the destruction of manufacturing jobs, they might just have a helpful suggestion. Perhaps in the winding-up speeches, the Opposition Front Bench will say what we should do.
The House will probably be glad to hear that, as other hon. Members wish to speak, I shall discard about half my speech.
There are now 400,000 more jobs than when the Government came to office, although they are not in manufacturing and we must look closely at that. However, it is a sign of improvement. We have low long-term interest rates to encourage manufacturing investment, which will help in the medium and long term. Hopefully, the new deal for the long-term unemployed and people who were excluded from the labour market during the previous Administration will help people to get the jobs which they are currently unable to access. In the medium term, that will make a big difference to individuals, manufacturing and employment creation.

Mr. Ian Bruce: I am grateful to the hon. Member for Liverpool, Garston (Maria Eagle) for being brief, and I shall be brief so that other hon. Members can speak. I am rather sad, however, because the hon. Lady had an opportunity to tell Government Front Benchers what her constituents want. Of course it is good fun to knock the previous Government, but Conservative Front Benchers cannot, for the next few years, give her constituents what she is looking for.
I listened with care to the Secretary of State. One never wants to insult or attack someone who has decided to leave the Chamber and not listen to the speeches, and we are told that he is a man of great ability, a great wit and a great spinner, but what he was spinning today was great nonsense. I understand that his grandfather, Herbert Morrison, was asked what socialism was. He replied, "Whatever a Labour Government do." That makes him the grandfather of all spin doctors.
The Secretary of State tried to pretend that the 400,000 jobs that have been created since the Labour party came into power were not created because of Conservative party policies, and tried to pretend that the fact that unemployment has been coming down in the United Kingdom for a long time, under Conservative and Labour Governments, was also not due to Conservative party policies. I think that I have been consistent in my advice

to Conservative and Labour Governments about listening to what is happening out in the real world, and the Government are foolish in the way that they treat advice from Conservative Members.
I can speak about factory closures. I was made redundant in 1975 because of the closure of the Edwards Scientific Instruments factory, which operated on behalf of Sinclair in producing calculators. That was a growth market and one of the areas that should have been thriving, even though the then Labour Government were creating unemployment in all directions. The company listened to the blandishments of the Labour Government to take people on—through one of the schemes that they introduced to try to prevent unemployment—in subsidised employment.
The scheme was so complicated that it took the Government a year to come back to the company and say, "For some technical reasons, we have decided that you will not be allowed to get the money." The plug was pulled on the £500,000 that it thought it would receive through that wonderful scheme to employ hundreds of people to make electronic calculators in Yorkshire. The company was so extended by expanding its work force that, once the plug was pulled by the Government, the bankers said, "Oops, sorry, we'll pull the plug as well." The company went down and hundreds of people lost their jobs.
I tell that tale not because I want to bash the previous Labour Government—although, clearly, as a Tory I would love to do that—but because it reminds us of what is happening today with the Government. When the Labour party came into power, it rightly identified long-term unemployment as the part of the unemployment figures on which it should concentrate. The figures had been coming down rapidly under the Conservatives, and the momentum continued when the Labour party kept to most Conservative spending limits.
The Government keep telling us about the new deal, however. I asked the Library to find the figures showing long-term unemployment coming down, using statistics for the past 10 years.

Maria Eagle: The new deal has only just started.

Mr. Bruce: The new deal has only just started, but let me give the figures. When the Government were operating under Conservative party policies—in the April to July 1997 quarter–27,000 young people, and 37,000 over-25s, came off the long-term unemployed list. In those days, we had fresh start interviews, job clubs and an economy that was working well. Obviously it is early days, but what happened for young people between April and July this year, after the new deal came in and we had all those pilot schemes? Not 27,000 off the list, and not hundreds of thousands of people going on to the new deal, as we have been told, but 2,500 people off the list—a tenth of the number—and that under the same Labour Government.
What about older people? The new deal has not come in quite so quickly for them, so the figure has gone down from 37,000 off the long-term unemployed list to 10,000 off it.

Maria Eagle: Will the hon. Gentleman give way?

Mr. Bruce: Perhaps the hon. Lady thinks I am being unfair, but let me finish the statistics, or she may dig herself a hole.


I have not mentioned the worst quarter—January to April 1998—when the Government were telling everyone how much they would do under the new deal. The number of long-term unemployed went up by 1,200. We shout at Ministers to allow us to intervene in their speeches and say that the new deal is not working. No wonder they do not allow me to intervene, because I have the statistics—all the deal.
New deal was a new deal, but it contained four jokers, I reckon: the Government stopped the fresh start interviews, which were working so well; they closed the job clubs; they took all sorts of money out of the jobcentres; and £5 billion in extra taxes was put on the utilities. Those companies could have reduced their prices to consumers by £5 billion, or they could have been told to spend the £5 billion creating new jobs, but no: the £5 billion was taken out and used for this so-called new deal—the four jokers.
What happened in the rest of the economy? We were warned that boom and bust would come again. We were getting up to growth rates of almost 3 per cent.—the boom—so we had to jam on the anchors. Interest rates had to go up, exchange rates were pushed up and we had all these extra regulations. That was completely wrong. When we were in office, I argued with my own Front Benchers that interest rates were too high. I experienced the charm offensive years ago, when people told us, "If only we had an independent bank, interest rates would come down automatically—overnight—by at least 1 per cent."
Real interest rates are the ones that people talk about. Remember, German inflation is about 1.5 per cent. and real money is borrowed at 4 per cent. The real interest rate is about 2 per cent. or 2.5 per cent. What is it here? Our interest rate for borrowing money is 9 or 10 per cent.—not the bank rate—because there has to be 1 per cent. or so on top. That is more than three times the rate of inflation, which is why we have great problems with investment in this country. If independence for the Bank of England gives us that, I for one would say, "It is proven; we were right not to give it independence." By the next general election, we will be able to judge whether we should bring the Bank back into political control.
If people do not believe my arguments, they should page the parliamentary data and video network and look up Peter Shore. He made the same speech on the Bank of England almost all the time, and his speeches would persuade Labour Members, as well as Conservative Members, that independence for the Bank of England was no panacea.
What about this unsustainable growth of 3 per cent. on which we had to slam the brakes, to prevent us from reaching such a level? What is the Chancellor telling us? He is saying, "We will have terrible growth this year and next year, but we will get back up to 3.1 per cent." Why did we put the brakes on? Come on: if it was right to put the brakes on and to put on high interest rates because of whatever legacy the Conservatives were supposed to have left, it certainly was not right when all the disasters in Japan, the far east, the middle east and south America happened. That world recession was certainly enough to put the brakes on.

Mr. Hayes: I am most interested in my hon. Friend's analysis. Is not the truth that the Bank of England was

remarkably insensitive to that change? It was slow; a politician would have been more reactive and more sensitive to opinion and circumstances and would have been able to react more quickly. The Bank of England has done too little, too late.

Mr. Bruce: My hon. Friend makes a telling point. The Government trust in bankers and their good sense, so why have they appointed Mr. Don Cruikshank to persuade the bankers to lend money to industry in a more sensible way, even though we rely on bankers to tell us what interest rates should be for our industry? That is completely wrong.
I want to mention the working time directive, because there is an issue of bad drafting. How many people realise that someone who starts working for a company on 1 July, in a couple of years will get four weeks' paid holiday, as he has always done, but each year he will have to take all his summer holiday by the end of June? Do Labour Members realise that? People will not be allowed to save any of those four weeks forward.
Every company for which I have worked had a policy of allowing a week or so to be transferred forward. That could be agreed, but there are absolutely no derogations in the working time directive on holiday pay. That will affect all our constituents, because hon. Members did not bother to consider the regulations closely.
What about the position locally? I am fortunate enough to have in Weymouth an economy that is working well. Unemployment is still going down, and we have not yet had any disasters. I do not talk the economy down or try to destroy jobs. When the Royal Navy was leaving Portland in my constituency, the previous Government had policies that amazed me. Every Department seemed to know that there was a problem in Weymouth and Portland and was able to do something about it, whether it was building a new land registry or building new roads.
What do we have now? We have First Portland and Portland Port Ltd., and an enterprise centre is being set up using the single regeneration budget grant. We are facing hard times, however, because the single regeneration budget and assisted area status are under threat from the Labour Government. We were promised a relief road, but that has been delayed. The South Dorset economic partnership was established with little Government money. The money came from the training and enterprise council, but TECs have had money taken away from them and given to the regional development areas, so the South Dorset economic partnership has had to close. We are now to lose the last bit of the Navy base. The Government have it in their power to release this land for productive use. At least three people want to bid for it, but the Government will not release it until next year.
The Government must look at the lessons that we learned during our last recession and accept that it is not Conservative Members who are talking down the economy: they have done that for themselves.

Mrs. Claire Curtis-Thomas: Thank you, Mr. Deputy Speaker, for allowing me to speak on this important occasion.
Under the Tory Administration, which this nation endured for 18 years, a business went bust, on average, every three minutes of every working day. That is not a


record of which to be proud. One in five households with someone of working age had no one in work, and at the end of their period in office there were more than 1 million fewer jobs than when the right hon. Member for Huntingdon (Mr. Major) became Prime Minister. Moreover, 800,000 people earned less than £2.50 an hour, and in-work benefits cost every taxpayer £160 a year. Britain slumped0 from 13th to 18th in the world prosperity league, and our investment level was one of the lowest of the 24 countries of the Organisation for Economic Co-operation and Development. Total manufacturing investment was lower in real terms in 1996 than in 1979. That is fact.
By contrast, we believe that industry and small and medium businesses are vital to Britain's economy because of the wealth that they create, the jobs that they provide and the ideas and technology that many of them develop. The Tories claimed that they were the friends of small businesses, but their actions told a very different story. In 1992, 65,000 businesses closed. The Tories were responsible for record business failures, with all the misery that that brings, more red tape and total inaction on late payment, crippling many small businesses. Taxes went up for small businesses and petty regulations multiplied.
Since the Labour party was elected, what have we been doing? We have been asked what we intend to do, but what have we already done? We have introduced a statutory right to interest on late payments, we are providing SMEs with better information and support and we are committed to cutting unnecessary bureaucracy and compliance costs. That is action: we are trying to do something, because something is better than nothing, which is what the Tories delivered in 18 years.

Mr. Bercow: Will the hon. Lady give way?

Mrs. Curtis-Thomas: No.
We are intent on giving British industry what it needs to thrive. We have set tough rules on spending and borrowing to ensure low inflation and to strengthen the economy, so that interest rates can be kept as low as possible. We are putting in place a medium-growth strategy, which encourages long-term investment and sustainable growth—not short-term growth, but sustainable growth for the long term.
We have rightly transferred the task of setting interest rates to the Bank of England. The Tories used interest rates as a cosmetic tool to hide their failure. We are making a major monetary activity more effective, open and accountable, and free from short-term Tory manipulation. Even the suggestion that the Tories may take back ownership of that important monetary policy dismays me, and would probably dismay most of British industry.
The Labour Government recognise that investment in training and in a skilled, flexible work force is crucial to Britain's future competitiveness. The Tories abandoned the young and those people with considerable skills who were forced into redundancy. The previous Administration had an abysmal record. I had the unfortunate pleasure of working in the docks, and I echo the sentiments of my hon. Friends. You were responsible

for the wholesale closing of industries, and you did not give a damn what happened to those communities as a consequence.

Mr. Deputy Speaker: Order. The hon. Lady must use the correct parliamentary language.

Mrs. Curtis-Thomas: My apologies, Mr. Deputy Speaker.

Mr. Brady: Will the hon. Lady give way?

Mrs. Curtis-Thomas: No.
Britain's work force have fewer skills than those of our major competitors. You may not like—my apologies, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. I repeat that the hon. Lady must use the correct parliamentary language.

Mrs. Curtis-Thomas: The Opposition may not like to hear these facts, but they are true. Britain's work force have fewer skills than those of our major competitors. Less than half our work force are qualified to NVQ level 2 or above. According to the 1996 world competitiveness report, Britain has fallen from 42nd to 48th in the international education league. Youth training has failed more than half its trainees, many of whom have left within a few weeks of starting their training schemes.

Mr. Hayes: Will the hon. Lady give way?

Mrs. Curtis-Thomas: When I have finished these points.
What has the Labour party done to address those issues? Contrary to what Opposition Members have said, the new deal is giving young people the first chance they have had to participate in the workplace. I am delighted that that programme is now being extended to older workers and to lone parents, who are vital contributors to the economy and were ignored by Tory Administrations.
Improvements to and extension of the Investors in People programme has encouraged more employers, especially smaller firms, to train their work force. We have seen the biggest ever investment in the research budget, which is vital for investors and for the academic infrastructure.

Mr. Bercow: Will the hon. Lady give way?

Mrs. Curtis-Thomas: After I have finished this point.
That investment of £1.4 billion over three years includes a substantial contribution from Wellcome, and is one of the most significant private-public sector partnerships that this country has ever seen.

Mr. Hayes: Will the hon. Lady give way?

Mrs. Curtis-Thomas: When I have finished.
A radical numeracy and literacy drive has ensured that children in primary schools today will have the skills and ability to be the wealth generators of tomorrow. Industry and manufacturing were totally neglected by the Tories,


but they are embraced by the Labour Government. We are not merely paying them lip service; we are introducing practical measures to enable them to survive and thrive.

Mr. Hayes: I am extremely grateful to the hon. Lady for giving way. I do not want to interrupt her flow, although perhaps that is not quite the right word to describe it. Before coming to the House, she spent most of her time in higher education.

Mrs. Curtis-Thomas: indicated dissent.

Mr. Hayes: The record suggests that she spent more time in higher education than in business.

Mrs. Curtis-Thomas: No.

Mr. Hayes: Perhaps the record is wrong. The hon. Lady may acknowledge that those of us who have spent some time in business understand the importance of overheads. What estimate has she made of the damaging effect of overheads as a result of the increasing bureaucracy and regulation imposed by the Government? Drawing on her enormous business experience, what estimate has she made of the effect that that will have on employment and jobs?

Mrs. Curtis-Thomas: I have spent most of my working life in industry, in both the private and the public sectors. A small part of my working life was in the academic environment.
On overheads, I enjoyed—if "enjoyed" is the right word—the over-zealous activity of the Tory Administration, who produced the largest set of overheads that industry has ever seen.

Mr. Bercow: Will the hon. Lady tell the House why the definition of a small firm that the Government use for the purposes of the late payment of commercial debt differs from the definition that they deploy for trade union recognition?

Mrs. Curtis-Thomas: I shall allow the Minister to answer that interesting question on my behalf.

Mr. Tim Boswell: It has been useful for the House to debate these serious matters, which bear on the future of Britain as an industrial nation. They directly influence the mechanisms by which wealth is created before it can be spent on the social agenda of any of us. We need to create the wealth before we can spend it.
I shall make a few points clear at the start. First, Opposition Members want Britain to succeed as a modern industrial country. We have no intention of selling British industry short. Given my experience, and given the fact that my constituency contains Silverstone and the greater part, or a significant part, of the Grand Prix and formula one industry, I know what engineering excellence can amount to, and I realise how vital it is to the preservation and, indeed, creation of jobs. I recognise the central importance of manufacturing industry, alongside the service industries.
Equally—as long as there is proper consultation, along with correct and sensitive treatment of any redundancies derived from those closures—there need be no suggestion from Opposition Members that factory closures are always and ipso facto wrong. It might be entirely proper to close a factory in order to rationalise production and to increase productivity, which is the objective—albeit not always perfectly expressed—of the McKinsey report and, I think, of all who have spoken today. It may even be sensible to replace one factory with another, on the same site or elsewhere, to expand production or the product range. I am fond of saying, as a throwaway line, that any Member of Parliament can go along and open a factory; the really interesting task is opening a factory extension, or a new facility replacing an old one.
Decisions such as those are the daily responsibility of boards of management and business people. Given the Secretary of State's sneering responses to the reasonable comments of my right hon. Friend the Member for Wokingham (Mr. Redwood) about productivity, it is possible that he is not the one who has experience of making such decisions; it may even be that he is the one who should be sharpening up his act. In view of the stress that he and others put on inward investment, however—rightly so, and we have a good record in that respect—let us not forget that there is no law of nature requiring foreign investors and their boards to come to this country. There is worrying evidence that that welcome tendency of recent years may be turning down. Nevertheless, we want boards based abroad, and overseas investors, to see Britain as a continuing base for their investment.
Secondly, we recognise that overseas economic conditions, disturbing as they are at present, are a vital part of the scene. They cannot be wished away, however much any of us would like that. I still find it strange that the Government can entertain the thesis that they have abolished boom and bust, while at the same time expressing worry about economic conditions. Perhaps they can explain how the two parts of that conundrum can be reconciled.

Mr. Bercow: In his characteristically polite and understated fashion, my hon. Friend suggested that it might be the Secretary of State who needed to sharpen up his act. Is his view not reinforced by the fact that, only last week, the Secretary of State said that the Government had no plans or proposals to lift restrictions on Japanese car imports? Two days earlier, in his pre-Budget statement, the Chancellor had announced precisely that.

Mr. Boswell: I was given a report to that effect, and I did not think much of the Secretary of State's reported contribution; but, if we are educating the right hon. Gentleman, that is an important part of our function.
Opposition Members do not feel that a one-sided caricature of our record in office over 18 years is a sufficient response from the Secretary of State and Her Majesty's Government to serious, current, pressing issues. Government Back Benchers made interesting comments. In one contribution in particular, there was clear evidence—given the vehemence of the attack on the outgoing Government—of real concern about the Government's ability to deliver their objectives, however commendable those objectives were considered to be.


Let me put something on the record. I was particularly interested by a comment from the head of McKinsey, Mr. Bill Lewis, which was reported in The Birmingham Post on 30 October. He conceded that Britain
had made great advances in the 1980s and early 1990s in deregulating its labour and capital markets and these were now every bit as competitive as those in the US.
I wonder who did that.
The challenge now",
said Mr. Lewis,
was to carry through the same sort of structural reforms in product markets".
That is a reasonable objective, and it is right that we should consider it.
It is clear to us, as we open our newspapers, that the industrial casualty list is lengthening day by day, with news of further closures and job losses that were well set out by my right hon. Friend the Member for Wokingham and others. My constituency is poised between the—already known—major cuts at Barclaycard in Northampton, and the possibility of up to 5,000 job losses at Rover in the west midlands, referred to by my hon. Friend the Member for Bromsgrove (Miss Kirkbride) in a worthy contribution. There is also the likely spin-off affecting components suppliers and the service industries. Only today, someone mentioned a "multiplier estimate" that, for every job lost in manufacturing industry, 3.5 jobs could be lost in the economy as a whole.
The examples that I have cited make the interesting point that not all job losses are in manufacturing industry. The financial services industry is also haemorrhaging, and it is of equivalent importance. We are concerned about both sectors.
Notwithstanding the reported remarks of the Governor of the Bank of England, this is not solely a question of one hard-hit region, although the problem is concentrated in the north-east. In towns on the south coast, losses are reported at Guardian Royal Exchange in Eastbourne and Folkestone, and Philips is to close its kettle factory at Hastings. I believe that, at its peak, it employed only 800 people, but now there are to be 160 job losses.
I do not wish to make Cookson a target of my criticism, but it provides another example of what has been happening to mainstream industrial materials groups. A weekend report of its results was described as offering a more gloomy than expected trading statement, with a share price fall of nearly 10 per cent. Profits had fallen sharply in the third quarter of the year. Cookson is a company that is central to the local economy.
Nor are prospects more encouraging. My right hon. Friend mentioned, in the context of the trading difficulties of Marks and Spencer, a report that the textile industry faces an estimated loss of 60,000 jobs. PricewaterhouseCoopers predicts a 40 per cent. increase in the number of insolvencies by the end of the millennium, only about 14 months from now. The Machine Tool Technologies Association's survey on demand, which I have before me, reveals some dreadful trend figures. We do not need to run down industry, because there is already an acknowledged problem.

Mr. Bob Russell: During the debate, news was faxed to me that the Colchester-based Spottiswoode Ballantyne and Ipswich-based Cowells printing firms have gone under, with a loss of 228 full-time employees.

Mr. Boswell: That makes the point eloquently. I am only sorry for those who have lost their jobs.
It is not terribly surprising that the Secretary of State should extend his new Labour initiatives to taking a close interest in the insolvency laws. That reflects the current equivocation in his Department. On the one hand, it is all right to introduce measures to enforce statutory late payment of debt; on the other hand, those who want to get their money back may not get it back from their creditors.
We now come to the Government's own role in this. They, of course, are programmed to deny: it is anyone's fault but theirs. Yet it is they who have increased business taxation through their acceleration of corporation tax payments, their raid on pension funds and a number of other measures—such as fuel duties—that have directly affected industrial costs. On top of that, they have piled on regulatory burdens to the tune of an estimated £14 billion over this Parliament, figures derived from their own compliance cost estimates. That is, of course, where we have those estimates. Only this week, I was told that we are not to have a compliance cost assessment for the "Fairness at Work" White Paper until the legislation comes forward. That is also before we aim off for what I might call a certain insouciance in calculating the figures, for example, for the Competition Act 1998 compliance costs.
Ministers never understand the sheer gut-wrenching effort that is required by a small business, for example, to comply with the requirements of record keeping, with a 17-week reference period for the working time directive and a separate four-week period for the national minimum wage. Only today, a medium firm employing 100 people told me that it would be taking on an employee. That employee was required for record keeping for those two functions, and so was not a productive employee, but that is the only type of employment that the Government can encourage. Of course, those figures are all on present labour costs, not on future ones.
The effect of all that is to load some £1,500 on to the cost of each British job. It is not surprising that there will be fewer of them. The effects have been damped by economic buoyancy—the golden legacy that the Government inherited from us—and the ability of firms to take out a year's foreign exchange cover, but, just as those are running out, we shall find the industrial consequences of last year's hike in interest rates and the escalation of the pound coming through.
The euro could make matters even worse if it is now going to work to a left-wing political agenda. If it softens and the pound stays high, that would be another blow to British industry.
My first advice to Government is simply to acknowledge the problem that they have. The second is to take some practical action to tackle it. Investment is not helped by the extra taxes on savings that they have introduced. Employment is not helped by the extra cost burdens that have been imposed on employers.
Just as the Government go around saying that industrial management should sharpen its cost cutting—and so it should—so Government can do some practical things to cut burdens on business: call a stop to extra regulatory burdens; freeze "Fairness at Work" until other burdens that they have already imposed have been assimilated; not impose green taxes on business unless other burdens on business are reduced at least commensurately; remember that other Government Departments have the capacity to do collateral damage to business unless the Government


practise the joined-up thinking that they always talk about; remember that excess government spending is inevitably feeding through into interest rates; and put some downward pressure on both.

Maria Eagle: Just as we thought, the hon. Gentleman's prescription appears to be: pay lousy wages and cancel investment in the health service and education.

Mr. Boswell: If the hon. Lady believes that, she is providing a prescription for the destruction of jobs that has always accompanied past Labour Governments and will, I fear, accompany this one.
Somehow, I doubt whether the Government could do those things. I think that they will use the McKinsey report not to improve productivity but as an opportunity for grandstanding and showing off at the expense of business. They will not give credit to business and the unions for the achievements of the past 10 years in making at least a large part of British manufacturing internationally competitive. Rather, they will use it as a platform for windy exhortation.
It is the Government, not the others, who should be sharpening up their act. It is not kind to someone who is sweating their guts out to get orders to tell them they should do, yet any minor douceurs offered by the Secretary of State and the Government, for example, to small and medium enterprises or high-tech companies will pale into insignificance alongside their matching increases in business costs. For all Ministers' proud rhetoric, they still do not understand the simple fact that a 1 per cent. uplift in costs, although apparently minor in itself, translates itself into a much higher percentage effect on the bottom line, which is the basis of all business success and new investment.
British manufacturing industry, then, is in a serious situation, but that situation is not terminal if the Government help. Ministers have claimed that they have put an end to boom and bust, yet their real concern is to pass the buck. Their attitude to British industry is four soundbites and a funeral.
If the Secretary of State finds sweat, scurf and dirty overalls too distressing for his fastidious tastes, perhaps he should remember Oscar Wilde: "To lose one parent"—or perhaps to lose one factory—"may be regarded as a misfortune; to lose more than one looks like carelessness."
Ministers have already done great damage. Their amendment stinks of complacency. Our motion, which I commend to the House, tells them that, if they do not mend their ways and sharpen up—or, if they cannot do that, show even a little human compassion for the casualties of their folly—this will return to haunt them.

The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche): Today's debate has shown a cynical and desperate Opposition talking down the economy. Conservative Members are desperate for a recession for their own political ends and for nothing else, and what do they do to bring that about? They fly in the face of reality. They ignore the facts. They ignore the real

job gains, and the fact that it is this Labour Government who are creating the economic conditions for long-term economic growth.

Mr. Brady: Will the Minister give way?

Mrs. Roche: Let me make a little progress first.
Unlike the Opposition, the Government are in touch with reality. As my right hon. Friend the Secretary of State for Trade and Industry has rightly pointed out, there is a serious downturn in the global economy and, yes, its effects have been felt by some companies in the United Kingdom. With one quarter of the world, including Japan, in recession, no country is immune from the effects of the instability in the world economy, but we are in a good position to survive the worst because of the prudent economic policies and actions that have been pursued since May 1997 to ensure the underlying strength of the economy.
The Government's job, amid all that, is to continue to ensure stability at home to withstand the worst effects of the world downturn and to create the conditions for sustained and steady growth. The response of all politicians—from the Government and hon. Members on both sides of the House—should be that we should not talk ourselves into recession.
The UK's economy is still growing. There is net job creation. I have yet to hear someone from the Conservative Benches admit that. Our economic fundamentals are sound, despite what the right hon. Member for Wokingham (Mr. Redwood) would have us believe.

Mr. Brady: rose—

Mr. Bercow: rose—

Mrs. Roche: What an embarrassment of riches, but it has to be the hon. Member for Buckingham (Mr. Bercow) because I missed him at the Select Committee on Trade and Industry today, so he has his opportunity to ask me questions now. I was there for him this morning, but he was not there.

Mr. Bercow: I had a personal family commitment, so I hope that the hon. Lady will be understanding.
Why did the Secretary of State tell the Select Committee on Trade and Industry last week that his Department had made no estimate of the annual cost of the parental leave directive, when his Department had already published an estimate of an annual cost of £55 million? Why is he so palpably ignorant of the matters for which he is responsible?

Mrs. Roche: It is such a shame, because the hon. Gentleman tries so hard. I have great admiration for his efforts, but he must get a grip on reality. That is not what the Secretary of State has said. He does not need to get back to the school drawing board.
As I was saying, we should not talk ourselves into recession. The economy is growing. Despite the scaremongering by Conservative Members, our economic policies are grounded in reality.

Mr. Chidgey: Will the Minister give way?

Mrs. Roche: Let me make a little progress, please.


Our economic policies are grounded in reality, ensuring long-term economic stability and employment; encouraging business to improve its competitiveness; very importantly, exploiting Britain's science base; and meeting the challenges of the new knowledge-based economy. Let us ground ourselves in reality and look at the facts. Since May 1997, 420,000 new jobs have been created in the United Kingdom. Over the past four weeks alone, companies have announced 13,000 more new jobs created than jobs lost. Those are all new jobs in manufacturing industry, which reflect the Government's commitment to long-term economic stability.

Mr. Boswell: In view of her Department's concern about productivity and the fact that even the Chancellor has produced an estimate of growth in the economy next year that is far below the trend rate for productivity, will the Minister advise the House whether, and to what extent, job losses will rise in the year to come?

Mrs. Roche: I have some respect for the hon. Gentleman, but he must get a grip on reality. Under this Government, more jobs have been gained than lost. Of course the Government have been concerned about productivity, which is why my right hon. Friends the Secretary of State and the Chancellor have been engaged with industry in looking at our productivity. That is what we want to address.

Mr. Chidgey: The Minister is talking about reality and saying that we should not talk ourselves into recession. Is it not right that she should make a distinction between the economy as a whole and manufacturing industry, which is what the debate is about? Does the Minister accept that the 29 City analysts that the Treasury uses to make its forecasts are telling us that, next year, there will be growth of minus 1.2 per cent., which is a recession? We should address that.

Mrs. Roche: If the hon. Gentleman would allow me to make some progress, I would tell him that, as a result of the global downturn, we accept that some companies have announced closures. However, the picture in manufacturing is mixed and some manufacturing companies are doing very well.
Unlike the Opposition, who seem to pray for redundancies and care only about the job losses that occurred in their party in May last year—that is what the debate is really about—the Government understand what factory closures mean for the real lives of those who work there and for the areas affected. We have taken steps to reduce the hurt caused by job losses by introducing rapid response groups, providing training and employment opportunities for those affected by closures and by working with the companies concerned, such as Fujitsu and Siemens, to help safeguard jobs.

Mr. Richard Burden: Within that context, will my hon. Friend join me in welcoming the partnership being established in Birmingham between Birmingham city council, the local training and enterprise council and the chamber of commerce to help the supply chain in the wake of the difficulties being faced at Rover? It is helping to ensure that that city is as well-equipped as it can be to withstand the challenges ahead. I ask my hon. Friend to welcome

the visit made to Rover by our right hon. Friend the Secretary of State. He visited the partnership and heard the discussions that took place last week.

Mrs. Roche: I am grateful to my hon. Friend for that point. I congratulate all the partners involved. I welcome my hon. Friend's remarks about the visit made by my right hon. Friend the Secretary of State, who I know has a great deal of admiration for what is going on there.
We are targeting areas most in need through the single regeneration budget, European funds and assistance to companies. In drawing up our proposals for the competitiveness White Paper, we are taking into account the importance of small firms—much has been made of that issue, which was mentioned by the hon. Members for Daventry (Mr. Boswell) and for Eastleigh (Mr. Chidgey) and by my hon. Friend the Member for South Ribble (Mr. Borrow). It was also mentioned by my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas), who has a great deal of experience as a chartered engineer in industry. All those points were well made.

Mr. Ian Bruce: rose—

Mrs. Roche: I must make some progress.
In May 1997, we inherited an economy where growth was running at an unsustainable rate and where inflation was heading way above target. The public finances were in substantial deficit—[Interruption.] Opposition Members may not like the facts, but they are going to hear them. We have determined not to repeat the mistakes made by the Conservative party. That is why we have taken tough and decisive action—[Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. Hon. Members must stop shouting at the Minister. No one should be shouting at the Minister.

Mrs. Roche: I am grateful to you, Mr. Deputy Speaker, but I do not mind Opposition Members shouting if they do not have any arguments.
We have taken action to prevent a return to the stop-go cycles of the past. We are determined to keep on course.

Mr. Bruce: rose—

Mrs. Roche: I must make some progress.
The economy is still expanding and creating new jobs and inflation is at its 2.5 per cent. target. There must be no return to the boom and bust of the late 1980s and 1990s when inflation rose to nearly 10 per cent. and interest rates hit 15 per cent.
Overall, nearly 3 million jobs were lost in manufacturing when the Opposition were in power. They do not like to be reminded of that, but they are going to hear it. The Opposition had the cheek to suggest today that our policies are damaging employment prospects.

Mr. Brady: rose—

Mrs. Roche: Please sit down.
The Opposition's attitude was pointed out by my hon. Friend the Member for Liverpool, Garston (Maria Eagle) in an impassioned speech. We have the policies for


employment growth. We have achieved that through what we have done with the corporate tax system, with our reforms of capital gains tax and what we have done on better regulation.
The Conservative party had the cheek to say—the hon. Member for Daventry mentioned this—that our election to office would lead to inward investment drying up. Let us come back to reality. During 1997–98—the first year under a Labour Government for 20 years—my Department's Invest in Britain Bureau recorded more inward investment projects than ever before. There were no fewer than 618 in one year. It is the first time that the annual total has ever exceeded 500. I am expecting the letter of congratulation from the right hon. Member for Wokingham (Mr. Redwood) in the morning.

Mr. Bruce: The Minister, who is always kind to me, can just catch her breath. I wonder whether she can deal with the important point which I made in my speech and which I think may have alarmed colleagues throughout the House. Article 13 of the working time directive deals with the fact that people have to take the leave to which they are entitled within the leave year. If somebody starts on 1 July, they must finish their summer holiday by 1 July.

Mr. Deputy Speaker: Order. That is far too long.

Mrs. Roche: I take the hon. Gentleman's point. He will know that, when we drew up the regulations, we consulted industry. Under the previous Administration, under the premiership of the right hon. Member for Huntingdon (Mr. Major), 10,000 new regulations were introduced. I do not think that we need any lessons from the Opposition.
We have Ericsson of Sweden planning to move a major international operation to London and Silicon valley's CISCO Systems, a world leader in internet technology, is to build a major research and development centre in Britain. Volkswagen has confirmed heavy investment plans at the Rolls-Royce plant in Crewe where the work force of 2,500 is expected to grow. Those companies come here because they see the advantage of locating in the United Kingdom. They are attracted by economic stability—[Interruption.]

Mr. Deputy Speaker: Order. The hon. Member for South Dorset (Mr. Bruce) has just made an intervention. He is now making a speech while the Minister is speaking. We cannot have that.

Mrs. Roche: I am saddened by the behaviour of the Opposition, but I am not surprised, because they do not care. They do not want to hear the facts.
Inward investment cannot be our only source for new jobs. It must be matched by the creation of new home-grown companies and industry. That is what we want to do. We want more high-quality start-ups and more creative start-ups. We want to back those who want to take long-term risks and ensure that they can go on and prosper. That is why we are consulting industry and why we shall shortly publish our White Paper on competitiveness. That White Paper will include new

proposals for promoting enterprise in the United Kingdom. We want to ensure that those objectives are achieved both regionally and locally.
Today's debate has shown that the Conservative party is out of touch with the people of the United Kingdom. I urge the House to reject the Opposition motion and to support the Government amendment.

Question put, pursuant to the Order [5 November]. That the original words stand part of the Question:—

The House divided: Ayes 154, Noes 323.

Division No. 372]
[6.59 pm


AYES


Allan, Richard
Goodlad, Rt Hon Sir Alastair


Amess, David
Gorman, Mrs Teresa


Ancram, Rt Hon Michael
Gorrie, Donald


Arbuthnot, Rt Hon James
Green, Damian


Ashdown, Rt Hon Paddy
Greenway, John


Atkinson, David (Bour'mth E)
Grieve, Dominic


Atkinson, Peter (Hexham)
Hamilton, Rt Hon Sir Archie


Baker, Norman
Hammond, Philip


Beggs, Roy
Hancock, Mike


Beith, Rt Hon A J
Harris, Dr Evan


Bercow, John
Harvey, Nick


Blunt, Crispin
Hawkins, Nick


Body, Sir Richard
Hayes, John


Boswell, Tim
Heald, Oliver


Bottomley, Peter (Worthing W)
Heathcoat-Amory, Rt Hon David


Bottomley, Rt Hon Mrs Virginia
Horam, John


Brady, Graham
Howarth, Gerald (Aldershot)


Brake, Tom
Hughes, Simon (Southwark N)


Brand, Dr Peter
Hunter, Andrew


Brazier, Julian
Jack, Rt Hon Michael


Breed, Colin
Jenkin, Bernard


Brooke, Rt Hon Peter
Jones, Nigel (Cheltenham)


Browning, Mrs Angela
Keetch, Paul


Bruce, Ian (S Dorset)
Kennedy, Charles (Ross Skye)


Burns, Simon
Key, Robert


Cash, William
King, Rt Hon Tom (Bridgwater)


Chapman, Sir Sydney
Kirkbride, Miss Julie


(Chipping Barnet)
Laing, Mrs Eleanor


Chidgey, David
Lait, Mrs Jacqui


Chope, Christopher
Lansley, Andrew


Clappison, James
Leigh, Edward


Clark, Rt Hon Alan (Kensington)
Letwin, Oliver


Clarke, Rt Hon Kenneth (Rushcliffe)
Lewis, Dr Julian (New Forest E)



Lidington, David


Clifton-Brown, Geoffrey
Lilley, Rt Hon Peter


Collins, Tim
Loughton, Tim


Cormack, Sir Patrick
Lyell, Rt Hon Sir Nicholas


Cotter, Brian
MacGregor, Rt Hon John


Cran, James
MacKay, Rt Hon Andrew


Curry, Rt Hon David
Maclean, Rt Hon David


Davies, Quentin (Grantham)
Maclennan, Rt Hon Robert


Davis, Rt Hon David (Haltemprice)
Maude, Rt Hon Francis


Day, Stephen
Mawhinney, Rt Hon Sir Brian


Dorrell, Rt Hon Stephen
May, Mrs Theresa


Duncan, Alan
Michie, Mrs Ray (Argyll & Bute)


Duncan Smith, Iain
Moore, Michael


Faber, David
Moss, Malcolm


Fabricant, Michael
Nicholls, Patrick


Fearn, Ronnie
Norman, Archie


Flight, Howard
Oaten, Mark


Forth, Rt Hon Eric
Öpik, Lembit


Foster, Don (Bath)
Ottaway, Richard


Fowler, Rt Hon Sir Norman
Page, Richard


Fox, Dr Liam
Paice, James


Gale, Roger
Paterson, Owen


Garnier, Edward
Pickles, Eric


Gibb, Nick
Randall, John


Gill, Christopher
Redwood, Rt Hon John


Gillan, Mrs Cheryl
Rendel, David






Robathan, Andrew
Tonge, Dr Jenny


Robertson, Laurence (Tewk'b'ry)
Tredinnick, David


Rowe, Andrew (Faversham)
Trend, Michael


Ruffley, David
Tyrie, Andrew


Russell, Bob (Colchester)
Wallace, James


St Aubyn, Nick
Wardle, Charles


Sanders, Adrian
Waterson, Nigel


Sayeed, Jonathan
Webb, Steve


Shephard, Rt Hon Mrs Gillian
Wells, Bowen


Shepherd, Richard
Whitney, Sir Raymond


Smith, Sir Robert (W Ab'd'ns)
Whittingdale, John


Spring, Richard
Widdecombe, Rt Hon Miss Ann


Stanley, Rt Hon Sir John
Wilkinson, John


Steen, Anthony
Willis, Phil


Streeter, Gary
Wilshire, David


Stunell, Andrew
Winterton, Mrs Ann (Congleton)


Swayne, Desmond
Woodward, Shaun


Syms, Robert



Tapsell, Sir Peter
Tellers for the Ayes:


Taylor, John M (Solihull)
Mrs. Caroline Spelman and


Taylor, Sir Teddy
Sir David Madel.


NOES


Abbott, Ms Diane
Clark, Paul (Gillingham)


Ainger, Nick
Clarke, Charles (Norwich S)


Ainsworth, Robert (Cov'try NE)
Clarke, Eric (Midlothian)


Alexander, Douglas
Clarke, Rt Hon Tom (Coatbridge)


Allen, Graham
Clarke, Tony (Northampton S)


Anderson, Janet (Rossendale)
Clelland, David


Armstrong, Ms Hilary
Clwyd, Ann


Ashton, Joe
Coaker, Vernon


Atherton, Ms Candy
Coffey, Ms Ann


Atkins, Charlotte
Coleman, Iain


Barnes, Harry
Connarty, Michael


Barron, Kevin
Cook, Rt Hon Robin (Livingston)


Battle, John
Cooper, Yvette


Beard, Nigel
Corbett, Robin


Beckett, Rt Hon Mrs Margaret
Corbyn, Jeremy


Bell, Martin (Tatton)
Corston, Ms Jean


Benn, Rt Hon Tony
Cox, Tom


Benton, Joe
Cranston, Ross


Bermingham, Gerald
Crausby, David


Berry, Roger
Cryer, Mrs Ann (Keighley)


Best, Harold
Cryer, John (Hornchurch)


Blackman, Liz
Cummings, John


Blair, Rt Hon Tony
Cunliffe, Lawrence


Blears, Ms Hazel
Cunningham, Jim (Cov'try S)


Blizzard, Bob
Curtis-Thomas, Mrs Claire


Blunkett, Rt Hon David
Dalyell, Tam


Boateng, Paul
Darling, Rt Hon Alistair


Borrow, David
Darvill, Keith


Bradley, Keith (Withington)
Davey, Valerie (Bristol W)


Bradley, Peter (The Wrekin)
Davidson, Ian


Bradshaw, Ben
Davies, Rt Hon Denzil (Llanelli)


Brinton, Mrs Helen
Davies, Geraint (Croydon C)


Browne, Desmond
Dawson, Hilton


Buck, Ms Karen
Denham, John


Burden, Richard
Dewar, Rt Hon Donald


Burgon, Colin
Dobbin, Jim


Butler, Mrs Christine
Donohoe, Brian H


Byers, Rt Hon Stephen
Dowd, Jim


Caborn, Richard
Drew, David


Campbell, Alan (Tynemouth)
Drown, Ms Julia


Campbell, Mrs Anne (C'bridge)
Dunwoody, Mrs Gwyneth


Campbell, Ronnie (Blyth V)
Eagle, Maria (L'pool Garston)


Campbell-Savours, Dale
Edwards, Huw


Cann, Jamie
Efford, Clive


Caplin, Ivor
Ellman, Mrs Louise


Casale, Roger
Ennis, Jeff


Caton, Martin
Etherington, Bill


Chapman, Ben (Wirral S)
Field, Rt Hon Frank


Chaytor, David
Fisher, Mark


Clapham, Michael
Fitzpatrick, Jim


Clark, Rt Hon Dr David (S Shields)
Fitzsimons, Lorna


Clark, Dr Lynda
Flint, Caroline


(Edinburgh Pentlands)
Flynn, Paul





Follett, Barbara
Lawrence, Ms Jackie


Foster, Rt Hon Derek
Laxton, Bob


Foster, Michael Jabez (Hastings)
Lepper, David


Foster, Michael J (Worcester)
Leslie, Christopher


Foulkes, George
Levitt, Tom


Fyfe, Maria
Lewis, Ivan (Bury S)


Galloway, George
Lewis, Terry (Worsley)


Gardiner, Barry
Liddell, Mrs Helen


Gerrard, Neil
Linton, Martin


Gibson, Dr Ian
Lloyd, Tony (Manchester C)


Gilroy, Mrs Linda
Lock, David


Godman, Dr Norman A
Love, Andrew


Godsiff, Roger
McAllion, John


Goggins, Paul
McAvoy, Thomas


Golding, Mrs Llin
McCabe, Steve


Gordon, Mrs Eileen
McCafferty, Ms Chris


Griffiths, Jane (Reading E)
McDonagh, Siobhain


Griffiths, Win (Bridgend)
McDonnell, John


Grocott, Bruce
McGuire, Mrs Anne


Grogan, John
McIsaac, Shona


Gunnell, John
McKenna, Mrs Rosemary


Hain, Peter
McNamara, Kevin


Hall, Mike (Weaver Vale)
MacShane, Denis


Hall, Patrick (Bedford)
McWalter, Tony


Hamilton, Fabian (Leeds NE)
McWilliam, John


Hanson, David
Mallaber, Judy


Healey, John
Mandelson, Rt Hon Peter


Henderson, Ivan (Harwich)
Marek, Dr John


Hepburn, Stephen
Marsden, Gordon (Blackpool S)


Heppell, John
Marshall, David (Shettleston)


Hesford, Stephen
Marshall, Jim (Leicester S)


Hill, Keith
Marshall-Andrews, Robert


Hinchliffe, David
Martlew, Eric


Hodge, Ms Margaret
Maxton, John


Hoey, Kate
Meale, Alan


Home Robertson, John
Michael, Alun


Hood, Jimmy
Michie, Bill (Shefld Heeley)


Hoon, Geoffrey
Milburn, Alan


Hopkins, Kelvin
Miller, Andrew


Howarth, George (Knowsley N)
Mitchell, Austin


Howells, Dr Kim
Moffatt, Laura


Hoyle, Lindsay
Moran, Ms Margaret


Hughes, Ms Beverley (Stretford)
Morgan, Ms Julie (Cardiff N)


Hughes, Kevin (Doncaster N)
Morgan, Rhodri (Cardiff W)


Humble, Mrs Joan
Morris, Ms Estelle (B'ham Yardley)


Hurst, Alan
Morris, Rt Hon John (Aberavon)


Hutton, John
Mudie, George


Iddon, Dr Brian
Murphy, Denis (Wansbeck)


Illsley, Eric
Murphy, Paul (Torfaen)


Jackson, Ms Glenda (Hampstead)
Naysmith, Dr Doug


Jackson, Helen (Hillsborough)
Norris, Dan


Jenkins, Brian
O'Brien, Bill (Normanton)


Johnson, Alan (Hull W & Hessle)
O'Brien, Mike (N Warks)


Johnson, Miss Melanie
O'Hara, Eddie


(Welwyn Hatfield)
Olner, Bill


Jones, Barry (Alyn & Deeside)
Palmer, Dr Nick


Jones, Mrs Fiona (Newark)
Perham, Ms Linda


Jones, Helen (Warrington N)
Pickthall, Colin


Jones, Ms Jenny
Pike, Peter L


(Wolverh'ton SW)
Plaskitt, James


Jones, Jon Owen (Cardiff C)
Pollard, Kerry


Jones, Dr Lynne (Selly Oak)
Pond, Chris


Jones, Martyn (Clwyd S)
Pope, Greg


Jowell, Ms Tessa
Pound, Stephen


Kaufman, Rt Hon Gerald
Powell, Sir Raymond


Keen, Alan (Feltham & Heston)
Prentice, Gordon (Pendle)


Kelly, Ms Ruth
Primarolo, Dawn


Kemp, Fraser
Prosser, Gwyn


Khabra, Piara S
Purchase, Ken


Kidney, David
Quin, Ms Joyce


Kilfoyle, Peter
Quinn, Lawrie


King, Andy (Rugby & Kenilworth)
Radice, Giles


King, Ms Oona (Bethnal Green)
Rammell, Bill


Kingham, Ms Tess
Rapson, Syd


Kumar, Dr Ashok
Reed, Andrew (Loughborough)


Ladyman, Dr Stephen
Reid, Rt Hon Dr John (Hamilton N)






Robinson, Geoffrey (Cov'try NW)
Strang, Rt Hon Dr Gavin


Roche, Mrs Barbara
Straw, Rt Hon Jack


Rooney, Terry
Stringer, Graham


Ross, Ernie (Dundee W)
Stuart, Ms Gisela


Rowlands, Ted
Sutcliffe, Gerry


Roy, Frank
Taylor, Rt Hon Mrs Ann


Ruane, Chris
(Dewsbury)


Ruddock, Ms Joan
Taylor, Ms Dari (Stockton S)


Russell, Ms Christine (Chester)
Thomas, Gareth (Clwyd w)


Ryan, Ms Joan
Thomas, Gareth R (Harrow W)


Salter, Martin
Timms, Stephen


Sarwar, Mohammad
Tipping, Paddy


Savidge, Malcolm
Touhig, Don


Sawford, Phil
Truswell, Paul


Sedgemore, Brian
Turner, Dennis (Wolverh'ton SE)


Sheerman, Barry
Twigg, Stephen (Enfield)


Sheldon, Rt Hon Robert
Vaz, Keith


Short, Rt Hon Clare
Ward, Ms Claire


Simpson, Alan (Nottingham S)
Wareing, Robert N


Skinner, Dennis
Watts, David


Smith, Rt Hon Andrew (Oxford E)
White, Brian


Smith, Rt Hon Chris (Islington S)
Whitehead, Dr Alan


Smith, Jacqui (Redditch)
Williams, Alan W (E Carmarthen)


Smith, Llew (Blaenau Gwent)
Wills, Michael


Snape, Peter
Wilson, Brian


Soley, Clive
Winnick, David


Southworth, Ms Helen
Winterton, Ms Rosie (Doncaster C)


Spellar, John
Wood, Mike


Starkey, Dr Phyllis
Woolas, Phil


Steinberg, Gerry
Wray, James


Stevenson, George
Wright, Anthony D (Gt Yarmouth)


Stewart, David (Inverness E)
Wright, Dr Tony (Cannock)


Stewart, Ian (Eccles)
Wyatt, Derek


Stinchcombe, Paul
Tellers for the Noes:


Stoate, Dr Howard
Jane Kennedy and


Stott, Roger
Mr. David Jamieson.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to the Order [5 November], and agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House recognises that the last thing business wants is a return to the boom and bust policies of the past, with interest rates of 15 per cent., inflation above 10 per cent. and a budget deficit averaging £41 billion a year from 1992 to 1996; welcomes the Government's decisive action in taking politics out of interest rate decisions, a move which the Opposition clearly does not support; notes that employment is currently 400,000 higher than it was when the Government came into office, and that long-term interest rates are at their lowest for 35 years; welcomes the measures that the Government has taken to encourage enterprise, investment and innovation, and to help unemployed people into jobs; welcomes the McKinsey Report as an important contribution to the productivity debate and notes that, unlike its predecessor, this Government acted to increase competitive conditions through a new Competition Act; and condemns the Opposition for its own record in government, when manufacturing employment declined by 2¾million and Britain went into deficit on manufacturing trade for the first time ever in peacetime.

Orders of the Day — European Parliamentary Elections Bill

Lords Reasons for insisting on certain of their amendments to which the Commons have disagreed, considered.

Lords Reason:
The Lords insist on their Amendments in page 2, lines 2, 15 and 18, to which the Commons have disagreed, for the following Reason:
Because electors should be able to vote for the individual party candidate of their choice.

The Secretary of State for the Home Department (Mr. Jack Straw): I beg to move, That this House insists on its disagreement with the Lords in their amendments.

Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss also the Government amendment in lieu of the Lords amendments, in page 3, line 46, at end insert—

'Review of electoral system

(1) The Secretary of State shall appoint one or more persons—

(a) to review the operation of the system of election provided for by section 3 of the European Parliamentary Elections Act 1978 as substituted by section 1 of this Act, and
(b) to make a report to the Secretary of State within six months from the day of appointment.

(2) The Secretary of State shall carry out his duty under subsection (1) within one month from the date of the first general election to the European Parliament which takes place after the coming into force of section 1.
(3) The Secretary of State shall lay a copy of any report received under subsection (1)(b) before each House of Parliament.'.

Mr. Straw: I hope that I can be brief because we are covering some well-trodden ground. The other place has now voted twice to amend the Bill to change the nature of the list system for which it provides. On both occasions, I should add, had it not been for the votes of the hereditary Conservative peers, the Government would have won the day comfortably. The issue has now gone way beyond whether we have closed lists, open lists or Belgian lists: there is now a challenge to the authority of this democratically elected House by hereditary Conservative peers.
The Government have carefully studied reports of the debates in another place, as would be expected, and the arguments advanced in support of the amendments that were made, including the arguments advanced by the hereditary peers. However unsatisfactory its composition might be, of course we accept that the other place is a revising chamber. We therefore give proper consideration to any suggestion that it might make that a piece of legislation ought to be revised. Having done so, I am moving an amendment to make one important change to the Bill which we hope will meet some of the concerns that have been expressed.


The amendment would provide for a review of the new system to be carried out shortly after the first elections using it. It makes it clear that there will be a thorough examination, that one or more persons will be appointed by the Secretary of State
to review the operation of the system of election
and make a report to the Secretary of State
within six months from the day of appointment",
and that any such report shall be laid before each House of Parliament. I then anticipate that it will be subject to a very full debate.

Mr. Geoffrey Clifton-Brown: Will the Home Secretary say according to what criteria the review will be undertaken, and what the terms of the review will be?

Mr. Straw: The review will be very wide, as set out in the amendment—should the House and the other place approve it. The amendment states:
The Secretary of State shall appoint one or more persons—
(a) to review the operation of the system of election provided for by … the European Parliamentary Elections Act 1978"—
as amended by the Bill—and
(b) to make a report to the Secretary of State within six months from the day of appointment.

Mr. Dale Campbell-Savours: Will my right hon. Friend give way?

Mr. Straw: I shall give way in a moment.
I must make it clear that a review of the operation of the system does not simply mean a review of the counting process. If this House and the other place approve the amendment, the review will consider whether the closed list system itself operated satisfactorily. We are dealing with fundamental issues.

Mr. Campbell-Savours: I welcome the review. It is very good news, and it will be greatly appreciated by people across the country.

Mr. Straw: For all the mocking laughter from the clones from the Opposition Whips Office, any welcome from my hon. Friend the Member for Workington (Mr. Campbell-Savours) comes at a very high price.

Mrs. Margaret Ewing: Will the review enable the Scottish Parliament and the Welsh Assembly to review in their own right how the lists operate in Scotland and Wales?

Mr. Straw: The review relates only to the operation of European parliamentary elections. The Bill is concerned only with European parliamentary elections, so it could not possibly refer to any other elections. With respect to the hon. Lady, that has to be a matter for inclusion in the Scotland Bill and the Government of Wales Bill. I do not doubt that, once the elections are over, there will be many reviews of the way in which the system works; that is entirely right, as they are all new systems.

Mr. Desmond Swayne: The review is a wonderful idea that has been much greeted by

Labour Members, but would it not have been better, given the views expressed by their Lordships, by Opposition Members and most importantly by Labour Members when we debated the issue last week, to have an open list and review that?

Mr. Andrew Lansley: rose—

Mr. Straw: I shall come to the fundamental issue in a moment, but first I give way to the hon. Gentleman.

Mr. Deputy Speaker: I call Mr. Graham Brady. [Interruption.]

Mr. Lansley: If such a review were to conclude that the closed-list system had operated in an unsatisfactory way, would it be possible to revert to an open-list system or another system without primary legislation? If that were not possible, the entire structure of the proposal would be undermined.

Mr. Straw: Before replying, let me remind you, Mr. Deputy Speaker, that this is the Member for South Cambridgeshire (Mr. Lansley), a very fine Member of Parliament.

Mr. Deputy Speaker: It is just as well that I was not drawing up any lists.

Mr. Straw: I shall work that into my speech later, when I come to the problem that the British public will encounter in differentiating between one Conservative candidate and another. Although the correctly named hon. Member for South Cambridgeshire is in error over his views, he is otherwise okay, as he went to a good school—the same one as I did.
There is a very good reason why it should not be possible to change the voting system by statutory instrument. We are dealing with fundamentals of our democratic system, and it would be wrong to change them by statutory instrument. If the review concludes that the closed-list system is the wrong system as it has produced all sorts of perverse results—and if that is what Parliament finally accepts, and I hope it is—there will be huge pressure on the Government to change. In any event, there will have to be a debate on the result of the review.

Several hon. Members: rose—

Mr. Straw: As I have taken five interventions in eight minutes, I should like to make some progress. I shall then take interventions from my hon. Friends.
The other place decided to push for a fully open system in place of a closed-list system, which we believed was the most appropriate way for voters in Great Britain to elect their Members of the European Parliament. Let me explain—particularly to Opposition Members—how an open-list system would work, as the results of an open-list system are not quite as they might anticipate.
Under such a system, the elector casts his vote for a particular candidate on a party's list, or for an independent candidate. He cannot cast his vote for the party's list as a whole. The votes received by each candidate on a party list are then added together to give the party total. That figure is used to determine how many seats the party


has won using the method devised by our old and sadly departed friend Victor d'Hondt, the famous Belgian. That is already set out in the Bill, and is relatively straightforward.
The party candidates must then be ranked in the order of the number of votes they have each received, and the seats are allocated in that order. So if the party wins three seats in a region, the seats are allocated to the three party candidates who won the most votes.
On the face of it, it seems a simple and fair system. However, as I explained previously—and with the approbation of the House—it has some perverse results and some major drawbacks. The first is that, under the open-list system, the candidate with the most votes is not necessarily elected. To the Conservative party, which believes so strongly in the first-past-the-post system for every election, that would be an overwhelming objection.
Let me explain how distortion and perverse results can occur. Under the open-list system, a party's total vote is the sum of the votes cast for its individual candidates. It may well happen that the total vote of one party—as I wish to be neutral, we shall call it party A—is high, but that that is due almost exclusively to the popularity of the first candidate on its list. Another party—party B—may have a smaller total vote, but that vote may be more evenly spread among all the candidates on its list. Each party B candidate could poll more votes than all but one of the candidates on party A's list, but party A would win more seats. I am glad to see that the hon. Member for Billericay (Mrs. Gorman) is looking confused.

Mrs. Teresa Gorman: Astonished.

Mr. Straw: The hon. Lady ought to be astonished by the astonishing result of the system that she proposes to vote for later this evening.

Mr. Eric Forth: The Home Secretary does not know why my hon. Friend is astonished.

Mr. Straw: I know exactly why the hon. Lady is astonished. Therefore, the second most popular candidate on party A's list will win a seat, even though he or she polled fewer votes than all the candidates on party B's list who are then not elected.

Mr. Llew Smith: Does my right hon. Friend anticipate that we are likely to gain anything new from the review that we do not know already? Under the closed system, we will centralise power, and a few party hacks will determine who becomes a Member of the European Parliament. For us in the Labour party, that makes a bad situation even worse, as we all know that the people at the top of the list for the European elections have been decided not by one person, one vote, but once again by a panel of about a dozen people.

Mr. Straw: I do not accept what my hon. Friend says about the system of selection that we have used for establishing the lists. Conceptually, there is no difference between the closed-list system for multi-vacancy constituencies in the European elections and the system

under which my hon. Friend and all Labour Members were selected. We are on party lists of one in our constituencies.

Sir Norman Fowler: indicated dissent.

Mr. Straw: The right hon. Member for Sutton Coldfield (Sir N. Fowler) is shaking his head, but he is wrong. There is no reason at all why, if we chose to do so, we could not have single-member constituencies, but open lists in which each party put forward two or three candidates and left it to the elector to choose. That would be the logical position for the Conservative party, but it is not what happens. If people want to vote Labour in Blackburn, they have only one choice. They have to put a cross against my name. Like it or not, in Blackburn Labour is Straw. In Blaenau Gwent, Labour is Llew Smith. They are closed lists. We have all accepted it for Westminster, and there is no difference of principle in respect of the European Parliament.

Sir Norman Fowler: The Home Secretary is inviting the House and the country simply to vote for a party. He is not giving people the opportunity to vote for a candidate. As recent experience has shown—with Labour candidates such as Gordon Walker—if the public do not like a particular candidate, even though he has the Labour label, they reject him. That is the point.

Mr. Straw: I do not call what happened in one constituency in 1964 recent experience, even given the longevity of the right hon. Member for Sutton Coldfield.

Sir Norman Fowler: What about Tatton?

Mr. Straw: "What about Tatton?" he says, sotto voce, as well he might. That makes my point. There was a party list of one person. The right hon. Gentleman may not have noticed that the Conservative candidate for Tatton was rejected not just because he was Neil Hamilton, but because he was the Conservative candidate.

Mr. A. J. Beith: That clearly proves the point, because the other parties in Tatton withdrew to avoid the dilemma of people who wanted to vote for their party, but did not want to vote for their chosen candidate. Is not the defect in the Lords amendment, which the Conservatives are supporting, that it would not allow people to vote for a party if they chose to do so, as so many do? The Belgian system, which the Conservatives failed to support, would have allowed that option.

Mr. Straw: The right hon. Gentleman is right. I noticed that the language of the right hon. Member for Sutton Coldfield suggested that voters should have an opportunity to vote either for a candidate or for a party. He said that they should have that choice. The open-list system does not give that choice, but requires voters to choose between anything up to 11 candidates on a list.

Dr. Tony Wright: My right hon. Friend rightly points out that all systems have anomalies. Under first past the post, it is possible for a losing candidate to get more votes than another candidate who wins. I welcome my right hon. Friend's review, because reviews are splendid things, but I do not understand how it is possible to review a principle. It is possible to review a procedure to see whether it is working well, but it is not possible to review a principle. Either one believes in voter choice or one believes in—

Mr. Deputy Speaker: Order. That was far too long. The hon. Gentleman might be able to catch my eye later.

Mr. Straw: With great respect to my hon. Friend, it is perfectly possible to review the operation of the closed-list system, as I hope Parliament will accept, and to review it in the widest possible terms, as I responded to the hon. Member for New Forest, West (Mr. Swayne). I do not follow my hon. Friend's other point. The one truth about first past the post is that, in any constituency, the candidate who wins the most votes wins the seat. He may not have won a majority of the votes, but he has to have won more votes than any other candidate. It is a very simple system.

Mr. Jonathan Sayeed: rose—

Mr. Straw: If I am able to make progress, I hope to give way to the hon. Gentleman later.
I was explaining that the open-list system could have the perverse result that a candidate could be elected with fewer votes than one who is not elected. That apparent inconsistency between the wishes of the electorate and the result would be difficult to explain to voters. It could also cause problems to a candidate elected with considerably fewer votes than a rival from another party. Would any of us like to be in that situation, going to the European Parliament having received 10,000 or 20,000 fewer votes than someone who was not elected? That winning candidate may have difficulty establishing themselves as a credible representative of the electorate.
There are other important drawbacks to the so-called open system. Already, very few people know who their Member of the European Parliament is or have any contact with them.

Mr. David Ruffley: rose—

Mr. Straw: Please allow me to make progress. I always do my best to give way to hon. Members from both sides, but if I give way all the time, it eats into the time available to other hon. Members to speak.
I am not criticising the current MEPs, many of whom, from all parties, work very hard. However, there are only 84 MEPs for the whole of Great Britain, and the European Parliament's functions are not such as to permit the traditional constituency representation role performed by Members of Parliament and some leading councillors.
With the new, large electoral regions, that will continue to be the case. Many—indeed, most—electors will have no knowledge of any of the candidates standing in their region. The names of the candidates on the Conservative party regional list may well mean

nothing to a Conservative supporter. Under an open-list system, he would be obliged to make a choice from among those candidates. He could not simply cast his vote for the Conservative party, as he would probably prefer.

Mr. Dominic Grieve: Does the right hon. Gentleman not think that it would be a good thing for people to pay some attention to who they are voting for?

Mr. Straw: We know from nearly 20 years' experience of European Parliament elections that, given the nature of the institution, the size of even the existing constituencies and the nature of the functions, only a handful of MEPs have more than a small chance of gaining sufficient publicity to be as well known as each of us in our constituency and beyond.
I have the internal Conservative party leaflet about the London region Conservative European Parliament team. The party sets out clearly on the front that it disagrees with the proportional representation system and is just trying to operate it if it goes ahead. The only candidates on the list who are reasonably known are two former Members of Parliament—John Bowis and Ian Twinn—who were well known in their constituencies. However, the idea that they could become well known across Greater London is unrealistic—and they are not even at the top of the Conservative party list.
Not knowing any of the candidates, a voter is forced to make an arbitrary decision. It is highly likely that they will choose the simple option, and vote for the first candidate on the list. However, there is evidence that, if the first candidate is a woman—as is the case on the Conservative list in London—or the candidate's name identifies them as coming from one of the ethnic minorities, the elector will head for a male candidate or one with a traditional British-sounding name elsewhere on the list.
There is also a danger that an elector who knows that they will be forced to make a decision between candidates of the same party but feels unqualified to do so, may choose not to vote. Unfortunately, the turnout for European Parliament elections in this country is already low. We do not want it to fall any further.
That is why the Government consider the closed-list system to be the most appropriate for the elections. The elector casts a vote for a party list as a whole, or for an independent candidate. There is every scope for independents to stand. There is no option of voting for an individual candidate on a party list instead.

Mr. Sayeed: I have a rather non-British name, but I was also elected. One of the problems with the closed-list system as operated by the Labour party is that the order of the candidates is determined by the party machine. This is where most of the objections in the Lords came from. The candidate will feel responsible to the party machine rather than to the electorate. At least John Bowis, Ian Twinn and all other Conservative candidates were selected and put in order by party members at an open election.

Mr. Straw: The hon. Gentleman is objecting to the internal processes of another party. Our party is run democratically. The Conservative party is now moving


towards that happy state. I understand some of the concerns, but it is a parody of the system that we have used to suggest that selection was carried out simply by the central party apparatus. [Interruption.] Let us be clear that, in transferring to the proposed system of parliamentary elections, we were generously—almost certainly—handing out seats to the Liberal Democrats and the Conservative party. [Interruption.] It is true.

Mr. Christopher Gill: Will the right hon. Gentleman give way?

Mr. Straw: No.
We had to manage that change, which resulted in very many fewer Members of the European Parliament than would otherwise be so, simply as a result of the elections.

Several hon. Members: rose—

Mr. Straw: I should like to make progress.
Opponents of the closed-list argue that being unable to vote for an individual candidate is somehow undemocratic or, dare I say, un-British. I profoundly disagree. Political parties are a vital and necessary part of our modern democratic process. Voting on party lines is not an alien concept to the electorate of today. As I have already said, each of us in the House stands on closed party lists of one.
It does not lie in the mouths of Conservative Members to suggest that we have an open list—we do not. If they wanted an open list for the Westminster Parliament, they should propose changes in our voting system so that two or three candidates stand for each of the parties, and the voter selects one. That is an open list. In Westminster, we have a closed list, and what we are proposing for the European Parliament is also a closed list.

Mr. Gill: rose—

Mr. James Paice: rose—

Mr. Straw: I want to make progress; this is a relatively short debate.
Under a closed-list system, there is no prospect of an anomalous result. Nothing is hidden from the voter. When voters cast their vote for the party of their choice, they can see the order in which that party's candidates will win seats, and vote with that knowledge. If voters dislike the first candidate on the party's favoured list, they are in exactly the same position as under the first-past-the-post system. Voters can choose not to vote for that party, or grit their teeth and put the party first despite its poor taste in candidates.
The closed-list system has the great benefit of simplicity. That is an important consideration, which we should not ignore. [Interruption.] On Thursday, Conservative Members complained about the Jenkins proposals on the basis that they were complicated. That was one of their many objections. Yet the system that they

are proposing in this debate is gratuitously complicated, and will produce even more perverse results than some systems of proportional representation.
I remind hon. Members of what Professor Patrick Dunleavy and Dr. Simon Hix of the LSE, and Dr. Helen Margetts of Birkbeck college, said in their publication "Counting on Europe":
Open list ballot papers are more complicated. The ballot paper will be much longer because all the candidates will have to be listed with tick boxes. People may feel obliged to look over all the names. a lengthy business in the South East region where with 11 seats there could be 40 or more candidates … some people such as the elderly, those who have difficulty reading, first time voters, and people who are just attached to the existing way of doing things may dislike the ballot paper or find it confusing …
A major study of voting systems carried out just after the 1997 general election provided good survey evidence that British voters do not like complicated ballot papers with multiple names and tick boxes and strongly prefer simple short ballot papers.

Mrs. Eleanor Laing: Will the right hon. Gentleman take it as a compliment if I suggest that all that he has said in the past half an hour is an excellent argument for sticking to first-past-the-post elections?

Mr. Straw: No, I do not take that as a compliment, much as I admire the hon. Lady. I set out my position on Second Reading on 25 November—almost a year ago; it has been consistently consistent. I made it very clear that the system of voting should be appropriate to the institution that is being elected. Nobody can seriously argue that acting as if the very large European Parliament constituencies were Westminster constituencies is satisfactory.

Mr. Harry Barnes: Some of us are opposed to lists whether they are closed or open. Some of us are opposed to closed lists because of problems of bureaucracy and who controls them, and open lists because members of the same party fight each other for a seat. That is not an argument against proportional representation, because different PR systems can function. I know where I stand on the Lords amendments: I will abstain in the vote, as I did previously. The Government's amendment in lieu proposes a review. I need to know how I stand on that. Will my right hon. Friend assure me that Lord Jenkins will not be in charge of the review?

Mr. Straw: Lord Jenkins is far too busy to do it. I cannot absolutely guarantee that, but I think that the possibility is remote. I shall quote Lord Jenkins later.
I ask hon. Members on both sides of the House to take into account another consideration before they vote. The Conservative party needs to think about this very carefully. We have been debating this issue for getting on for a year, during which all parties have undergone a selection process and have chosen the candidates for their lists. If Parliament were to reject the Bill, the consequences for the electoral system would be very severe.


Although I acknowledge that the hon. Member for Poole (Mr. Syms) did not agree with the principle of the Bill when he spoke on 27 October, he said the following sage words, which Conservative Members ought to heed:
parties have already chosen their candidates. We are coming to the end of the Session and to implement change at this stage would cause chaos and difficulty."—[Official Report, 27 October 1998; Vol. 318, c. 192.]

Mr. Forth: Will the right hon. Gentleman give way on that point?

Mr. Straw: No; I wish to proceed. I know that the right hon. Gentleman wants me to consider very carefully some words in the Jenkins report.
One thing has changed since we discussed this issue at the end of October: the report of the Jenkins commission has been published. We discussed it at some length on Thursday, and I do not want to go over that ground again. I shall just deal with one point, which was raised in the other place, about what the Jenkins report said about open and closed lists. The Jenkins commission was concerned purely and exclusively with elections to this House. We are discussing elections to the European Parliament—a body very different in composition and scope from the other place. As I said a moment ago, the electoral system for the European Parliament—and many other institutions—ought to be appropriate to that institution.
The people of the United Kingdom have always enjoyed close links with their Members of Parliament, and that would remain if the system recommended by the Jenkins commission were adopted—whatever views people take about its merit. By contrast, only 84 MEPs are elected from 11 regions for the whole of Britain. In such circumstances, voters will not be in a position to have detailed knowledge of the candidates or to make informed choices between them.
Lord Jenkins dealt, in his customary elegant prose, with what would happen if we ended up pretending to give voters choice but did not give them information. He says:
Where that choice offered resembles a caricature of an overzealous American breakfast waiter going on posing an indefinite number of unwanted options",
the system
becomes both an exasperation and an incitement to the giving of random answers".
It is fine prose, and accurate, too. The report continues:
In voting rather than breakfast terms, exasperation may discourage going to the polls at all and randomness lead to the casting of perverse or at least meaningless votes. Some people may want to be able to choose between candidates of the same party, but many are interested only in voting for parties, and would not appreciate being forced into choosing between candidates of the same party about each of whom they know little".
The Lords amendments would force electors to vote for candidates of a party about whom they know little, or, on occasions, next to nothing.

Mr. Forth: I refer the Home Secretary to the point that he made in passing, alleging that there would be chaos if we, as a result of the parliamentary process, had to revert to the first-past-the-post system. I remind him that, exactly 20 years ago, all parties were faced in the first European elections with the task of selecting candidates for an election that was exactly the same length of time away. They were all able to do so—even to the extent that

my party had the extraordinary good sense to select me for a European constituency. The electorate showed even greater good sense by electing me.

Mr. Straw: I rest my case. If ever there was an argument against that system, that is it.
In the other place, there was some suggestion that the Jenkins report recommended an open-list system, and therefore—oddly, given the position that they have taken on the report—the Opposition prayed Jenkins in aid. However, Jenkins did not recommend an open-list system for the top-up Members, nor did it recommend the Belgian semi-open list. Instead, it recommended its own variation of the Belgian system.
The report's solution was, it must be said, somewhat complicated. Voters would be able to vote either for the list as a whole or for individual candidates on the list, as in the Belgian system. Although the list votes would help to determine which party or parties got the additional seats, only the votes cast for individual candidates on the list would determine which candidates were actually elected.

Mr. Barnes: Will my right hon. Friend give way on that point?

Mr. Straw: No; I have already given way, and I want to get to the end of my speech.
No electoral system is perfect. All we can do is to attempt to match the most appropriate electoral system with the body that it is being used to elect. In the closed-list system, we believe that we have found the best match. It is no coincidence that it is the system that voters in Germany, France, Spain, Greece and Portugal use to elect their Members of the European Parliament. Of course, that is not a reason in itself for adopting the closed-list system, but it shows that we are not embarking on some astonishing constitutional innovation. Our proposal is not the great leap in the dark that has been portrayed.

Mr. Rhodri Morgan: The Home Secretary has made a distinction between the way in which the closed list operates as between the parties and the electorate, and the way in which any list, closed or open, is used in terms of the internal party processes to select Conservative or Labour candidates. Will he explain one thing to me, in my ignorance?
Is there not one way in which the internal processes of, let us say, the Labour party intersect with the measure before us, in that the one advantage of an open-list system is that it prevents a party from slipping a Mickey Finn into the cocktail? Does it not thus prevent a party from putting a person who for some reason would not be popular with the electorate, high up the list, so that the voters can do nothing about it?

Mr. Straw: I do not accept my hon. Friend's reasoning, but to pick up his metaphor, plenty of Mickey Finns have been elected from time to time on both sides of the House—people who are not especially acceptable to the electorate, but who have been put into safe seats, sometimes by their party machines. The electorate have closed their eyes, voted for those people as candidates on the closed list of a party, and they have been elected. I do


not suggest that my hon. Friend was elected through that system, but I remind him again that he was selected, and appeared on a closed list of one. The principle at stake here is no different from that according to which he and I—and every other Member of the House—was elected.
I ask Opposition Members to bear my final point particularly in mind. They claim that the closed-list system is anathema to the British constitution, has never been used before and breaches some fine democratic principle—a principle so important that it makes it acceptable for hereditary peers to override the will of the elected House of Commons.
What the Opposition, in their high-blown phraseology, forget is that they were the first party to use the closed-list system in the United Kingdom. That may come as a matter of some astonishment to them, but they voted for it; they introduced it. Of course, that was in Ireland, so perhaps they think that it does not count. However, Northern Ireland is part of the United Kingdom.

Mr. Sayeed: It had a particular problem.

Mr. Straw: Oh, it had a particular problem, did it? So the system was okay for Ireland, was it? I think that I shall take that as an admission. Now we have an admission that the closed-list system was all right for Ireland because there was a particular problem, and it needed an election using what the Conservatives said was a fair system.
Indeed, the former Prime Minister, the right hon. Member for Huntingdon (Mr. Major), did not say that Ireland needed the closed-list system because it had a particular problem. Speaking of the identical system, including d'Hondt, to that which is now before the House, the right hon. Gentleman said:
I believe that this is a fair and balanced system that will produce a representative outcome".—[Official Report, 21 March 1996; Vol. 274, c. 498.]

Sir Norman Fowler: rose—

Mr. Straw: That is what the former Prime Minister said about the system, and that is what we believe about the same system for election to the European Parliament. I commend the amendment in lieu to the House.

Sir Norman Fowler: The Home Secretary sat down very quickly then—and rightly so. What he said at the end of his speech was one of the cheaper points that he has made. The example that he used was drawn from an election for the deliberative forum on Northern Ireland, in the special circumstances of Northern Ireland.
The right hon. Gentleman quoted my right hon. Friend the Member for Huntingdon (Mr. Major), the former Prime Minister. I should point out that, on the same occasion, my right hon. Friend, replying to a point made by the then Leader of the Opposition, said:
I agree with his view that the electoral solution is not ideal".
He went on to say:
I have to say that there is no precedent that I know for the circumstances and complexities that exist in Northern Ireland. If I had been able to find an easier compromise more familiar to people

across Northern Ireland, I assure the House that I would have found and advanced such a compromise."—[Official Report, 21 March 1996; Vol. 274, c. 500-02.]
The Home Secretary's example was a cheap debating point that does not match up to the seriousness of the issue before us. The right hon. Gentleman has had difficulty with the subject, and he has convinced neither the Opposition nor, in my judgment, his own side of the House. We certainly shall not accept the proposal for review, in spite of what was said by the hon. Member for Workington (Mr. Campbell-Savours), because it does nothing to answer the case against the closed list in principle.
The right hon. Gentleman's case seems to be that choice is far too difficult for the public, so he will make the decision for us. It is not so much a matter of "trust the people" as of "trust the party". That goes totally against what most Members on both sides of the House believe. The Home Secretary was more at home when he was having a bash at the House of Lords than when he was defending his own proposals.
The hon. Member for Cannock Chase (Dr. Wright) was correct: there is one simple clear issue in the debate—the difference between a closed list, whereby the public vote for a party and not a candidate, and the open list, whereby the public can choose a named candidate to represent them. If that is the only choice that we have in the debate—and it is—I have no hesitation in opting for the open list.
I make it clear that the Opposition do not support proportional representation or the regional list. We prefer and would support the first-past-the-post system. That is what we have argued for and, judging by my own experience of the time when my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), who was then my local Member of the European Parliament, represented that area of the west midlands exceptionally well, it works in the European context.
The Government, with their overwhelming majority, have forced through their proposition none the less. The House of Lords has not challenged that basis for the election. As we are to have proportional representation and a regional list, the only issue at stake is how the public will elect their Members of the European Parliament.
The Government say that the party should choose Members of the European Parliament who will represent the public, and that the public's right to choose will be confined to voting for a party. They can vote Labour or Conservative or Liberal Democrat, and the party will provide the list of candidates in the order of ranking—

Mrs. Margaret Ewing: Or SNP.

Sir Norman Fowler: Yes; the public can vote for other parties too. I do not wish to offend anybody. The point is that the Government want the party to decide the list of candidates and the order of ranking.
The Home Secretary criticises the House of Lords and the role of the second Chamber, but he avoids the real criticism: the fundamental argument against his proposed system is that it is anti-democratic. It leaves the final decision in the hands of a party.
Even if a party does what the Conservative party has done and holds a one member, one vote selection conference, or does what the Liberal Democrats have


done and holds postal votes, the decision remains with the party. There is no escape from that—the party decides who will be elected. Thus we will have the kind of position to which I referred when we last debated the issue.
8 pm
To return to the subject of the west midlands, I wish to refer to the case of Christine Oddy. Miss Oddy is a sitting Labour Member of the European Parliament, representing Coventry and Warwickshire North. In the selection process, she was defeated by a former "EastEnders" actor, whose main claim—according to Labour's press office—was that he had been in a show at the Birmingham rep earlier that year. Not surprisingly, Miss Oddy was irritated—I put it no higher than that—at the selection. Her case was set out in the Birmingham Post on 24 September under the headline "My Anger at Labour Betrayal."
Miss Oddy modestly claimed on radio this week that she was better known than Edwina Currie. I am tempted to respond, "Particularly in her own family." However, let us accept her claim, which goes to the heart of what we are debating tonight. Under the system proposed by the Government, her knowledge of the west midlands and her reputation do not matter a jot. She could be better known than Margaret Thatcher and Barbara Castle put together and it still would not matter, because the party has put her seventh in a list of eight candidates. No one—least of all the Labour party in the west midlands—expects to win seven seats in the European elections.
I am not likely to vote for Miss Oddy and, frankly, the Home Secretary—had he a vote—would not be likely to vote for her either. The point is, however, that she has been deprived of standing as a named candidate on her record, and the public have been deprived of judging that record and expressing their choice.

Dr. Tony Wright: Is there not something slightly "Oddy" about the right hon. Gentleman's argument? Last week, we listened to his colleagues, to a man and woman, arguing for a closed list of one and against voter choice. Now we are hearing exactly the contrary arguments. Are we witnessing a conversion, or simply a contradiction?

Sir Norman Fowler: The hon. Gentleman may have heard that we would prefer the first-past-the-post system, but, lest he did not, I will underline that again for him. I thought that I had made that clear, as had a number of my hon. Friends. In this case, however, first past the post is not a choice that we have: the choice that the Government propose is not first past the post but a system of PR. The issue—and the hon. Gentleman may have been the first to say this—is whether we have a closed or an open list.
Let us be frank. There are very few people outside of the Government Front Bench who support the proposed system. The last time we debated it there were about two dozen Labour Members here, and there were about two dozen arguments against the proposal. No serious figure on the Labour Back Benches has come forward so far in favour of the Home Secretary's proposals. The reason is simple: the system transfers power to the party bosses—we all know that—and to the centre. The system takes power away from the people.
Frankly, it is an extraordinary system for the Labour party, and a Labour Government, to propose. That is why the leader in today's edition of The Times, under the headline "An open and shut case", said that closed lists are bad for democracy. It went on:
Mr Straw's patronising approach puts backroom machinations of party politics above the will of the electorate.
It called on the Home Secretary to think again—not that he showed much inclination to do that.
We all know that the Home Secretary does not believe in the system either. That is why he so is thankful to move from defending the closed list to attacking the House of Lords whenever he has the opportunity. Even that will not work, however. Among those who have voted against the Government in the upper House are well-known "Tories" such as Lord Shore of Stepney, Lord Stoddart of Swindon and Baroness Jeger.
Perhaps the most significant contribution to the debate in the House of Lords on 4 November came from another former Labour Member of Parliament who abstained from voting but demolished the case for the Government's proposals. Actually, I think that Lord Callaghan also deliberately abstained. The Labour peer to whom I am referring was Lord Evans of Parkside, a Member of this House for almost 24 years. He said that he had known the Home Secretary for many years and had worked with him closely. He had served for three years on the national executive of the Labour party. He even said that he had the greatest respect for the Home Secretary and for the pamphlets that he had written.
Lord Evans added, however, that he was sure that the Home Secretary would not be too upset if he said that the Home Secretary's speech on 27 October in the House of Commons was
not one of his most profound."—[Official Report, House of Lords, 4 November 1998; Vol. 594, c. 281.]
Lord Evans always did understate his case. He added—most significantly—that every Labour Member of Parliament who had spoken to him on the subject had made it clear that they were opposed not only to the closed list, but to the Labour party's method of selecting the candidates.
The only people consistently to have supported the Home Secretary's plans are, of all people, the Liberal Democrats. The irony of that is that they say they believe in the open-list system. They have argued for it, but when it has come to a vote they have consistently voted against it—the kind of politics that the Liberal Democrats have made distinctively their own in this country.

Mr. Beith: The right hon. Gentleman has forgotten that, in Committee, we proposed an open-list system—the Belgian system—but that he and his colleagues did not support it. Can he explain why that happened, and why he is now supporting a system that does not even allow the ballot paper to show the order in which the parties choose to rank their candidates?

Sir Norman Fowler: The Government rebuffed the right hon. Gentleman, as he well knows. In debates since then on the open list, the right hon. Gentleman and his hon. Friends have consistently voted with the


Government—although, in fact, they are still arguing in favour of the open list. That is what I find so odd about the Liberal Democrats' position.

Mr. Richard Allan: It is realistic politics.

Sir Norman Fowler: Oh. It is "realistic politics." My advice to the Liberal Democrats is to get off their knees and vote for what they think is right. They might get further and they would certainly win more respect.
I am not impressed by the Home Secretary's views, or by his attack on the House of Lords—which I gather he also carried out on lunchtime radio. In my view, the House of Lords has done a substantial public service. The Government's proposed closed-list system has few friends and, frankly, the House of Lords is right to challenge it.
Personally, I would advise the Home Secretary to be cautious in his argument about hereditary peers as compared with life peers. I notice that one of the life peers faithfully voting for the measure was his friend Lord Warner, who was a special adviser to the Home Secretary. It is not instantly evident why putting placemen in the Lords is a better way of arranging this country's affairs, nor do I think that simply turning the House of Lords into a giant quango is a change that many people will respect. I promise the Home Secretary that we will come back to that subject.
It is not just the House of Lords which backs the open list against a closed list. The Electoral Reform Society has said that a closed-list system is
bad for voters, bad for candidates and bad for democracy.
Charter 88 says that
we believe that voters should be able to choose between candidates of the same party.
Lord Jenkins—a marvellous man, whom both sides can quote to their advantage in the same debate—said that it would be an argument against any new system if
any candidate, by gaining party machine endorsement for being at the head of a list, were to achieve a position of effective immunity from the preference of the electorate.
That seems to be a powerful case, and obviously the view of Lord Jenkins—the Prime Minister's adviser—will count heavily with Labour Members, given the affection in which Lord Jenkins is obviously held by them.
I do not believe that any sensible, objective observer believes that the Home Secretary has made his case. The more the public understand what is being proposed, the more the opposition to the Home Secretary's proposal is likely to grow. We do not support the Government amendment, which is not intended as a serious response to the vote in the other place and answers none of the points raised there, or indeed, here.
The amendment makes no sense even in its own terms. The Government promise a review of the workings of the closed list, but only after the election has taken place. That cannot be a sensible answer to the arguments, and it does not remotely satisfy the concern that the measure is anti-democratic and would deprive the public of a choice that should be theirs.
We do not want a review of a voting system that is obviously flawed. We want the Government to drop their opposition and to concede that an open-list system is a better way to conduct the European elections. That is what the public want and what the House should vote for.

Mr. David Winnick: I am not in favour of the closed-list system, I have never voted for it and I do not intend to do so tonight. However, in a contest between the two Houses it would be inconsistent for me to argue that the views of the House of Lords should prevail over those of the Commons. Although I will not be in the Lobby tonight, I believe that where there is such a contest it is right and proper for the elected Chamber to have its way. It would be inconsistent with all that I have said about the other place for me to argue differently.
Nevertheless, I am not persuaded that the closed-list system is desirable or democratic. In fact, it is heavy in democratic deficit. I listened carefully to the speech of my right hon. Friend the Home Secretary, which was persuasive. If a good case could be made for the system, he undoubtedly made it, but I do not accept the premise of his argument in the first place. Lord Evans has been quoted in this debate and, like him, I have great admiration for the Home Secretary. I do not say that so as to stand a reasonable chance of getting to a higher place should there ever be a ranking system for election to Westminster. I have a genuine admiration for my right hon. Friend and I hope that I will not make him blush when I say that he is one of the best Home Secretaries that we have had in the post-war period. However, that does not mean that he is always right and I believe that he happens to be wrong today.
The ranking system is undesirable, despite all that my right hon. Friend has said. There is a difference between the way in which we are selected as parliamentary candidates for the Labour party and the way in which the system would operate for the coming European elections. We have been selected by the local party membership, with no intervention—as far as I know—by party headquarters or the regional office, and in my case that is just as well. The closed-list system, which would rank people first, second, third or fourth, is different. The choice may be made democratically and fairly and those deciding the ranking may well consider gender and ethnic minorities, which is desirable, but it is important not only that the system should be fair but that it should be seen to be fair.
Undoubtedly, there is a feeling in various regions that people have been placed at a disadvantage—they have been placed well down the ranking system not because they have done a bad job as Labour Members of the European Parliament but because their views have been unorthodox. One case has been cited. It has been said that that person has been ranked low because, about two years ago, she committed the cardinal sin of signing a newspaper advertisement that stated that the old clause 4 of the Labour party constitution should be retained. Some people may criticise her for that, but my own view is that it is not an offence for which she should go before the international war crimes tribunal.
If that MEP has been criticised for placing such an advertisement and has therefore been ranked low—that may not be the reason—so that her chances of being re-elected are that much smaller, I wonder about my own position. I not only may have signed an advertisement


about that clause: I argued for it—and I think I won the day—at the 1994 party conference. [Interruption.] I do not know what the right hon. Member for Sutton Coldfield (Sir N. Fowler) is muttering, but it may not be complimentary.
My right hon. Friend the Home Secretary said that an open-list system has all sorts of disadvantages. It will come as no surprise to those who know my views that I am not in favour of proportional representation. If the closed-list system is an example of PR, let us hope that we never have it for elections to Westminster. For one reason or another, a commitment to proportional representation was in our manifesto. If we are to have PR, with all its disadvantages, we should nevertheless have an open system. If the Government are saying that that is not possible and that there is no point in pursuing that line of thought, what is the purpose of the review? Admittedly, it is to be held after the European elections next year, but surely it is intended to reconsider the matter and, if there is no purpose in that, there is no point in having a review.
During our last debate on the Bill, I said that this is an on-going controversy. It will not go away. The system will come into operation—unless the Lords decide that they will not accept the Government's proposal. If they do not accept it, we will be in a totally different situation. We are all aware of the Parliament Act, the 12 months' delay and all the rest, but as I said the views of the elected Chamber should prevail.
I hesitate to speak for my hon. Friends, but it is doubtful—I shall put it no higher than that—that a majority of the parliamentary Labour party is in favour of the closed-list system. The Liberal Democrats are in favour and in the other place Lord Evans said that they were happy to go along with the proposal because they will have PR.

Mr. Douglas Hogg: Hon. Members will be interested to hear the hon. Gentleman say that a majority of the Labour party are not in favour of the closed list. It follows that there is not a majority in the House in favour of the proposal. If that is the case, why is the hon. Gentleman unhappy about the other place insisting on its view?

Mr. Winnick: My answer is simple and I thought I had made my reasoning clear. In a contest between the two Houses, the views of the elected Chamber should prevail.

Mr. Hogg: They are not the views of the elected Chamber.

Mr. Winnick: If the Government get a majority tonight, which they undoubtedly will, whatever the private views of the majority of my colleagues, that is how the House operates. That was true for the poll tax. The majority of Tory Members may well not have been in favour of that tax, but the Government had their way. The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) voted for the tax when he was a member of that Government.
In conclusion, and I hope that my right hon. Friend the Home Secretary will bear these words in mind, the Labour party has a long tradition of favouring every form of democracy, not least internal democracy. I do not want to

antagonise Conservative Members since they have probably agreed with me, but the Conservative party did not even get around to electing its leader until 1965, following an election defeat. We have elected people to national and local party posts from the very beginning. Whatever blemishes the Labour party has and whatever criticisms could be made against it, it is a democratic party and it saddens me that we do not have tonight the most powerful case on this issue. Although the European elections will almost certainly go ahead under the closed-list system, I must tell my right hon. Friend the Home Secretary that I hope that his review will be no charade. It must not be a means of saying that as there is a row, we must satisfy the other House.
Many of us are deeply uneasy about a system that gives too much authority to people in a party who have not necessarily been elected. It gives too much authority to people who will be able to decide whether or not a particular candidate's views are orthodox. That is not democratic, and it is therefore impossible for me to support the Government in the Division Lobby tonight.

Mr. Richard Allan: The right hon. Member for Sutton Coldfield (Sir N. Fowler) has made us a seductive offer in asking us to join the Conservatives in sustaining the amendments proposed by their hereditary peers. We confess openly that we are caught between a rock and a hard place. We have stated our support for the single transferable vote system used in Northern Ireland, which is the best possible form of proportional representation. During the early stages of the Bill, we also argued for an open-list system along the lines of the Belgian model, and that led to a vote in June, to which I am sure Conservative Members will refer, and which was lost in the other place by 15 votes as it did not have the support of the same Conservative peers who turned out to support the amendment that we are discussing now.
There are three paths before us. First, we could proceed with the closed-list system and the review, as the Government suggest. Secondly, we could reach agreement on the open-list system proposed by the Conservatives, with all the problems that that would entail. Thirdly, we could fail to resolve the dispute so that the Bill runs into the buffers at the end of the Session. I am pleased that the right hon. Member for Sutton Coldfield has come out as an overt and unashamed first-past-the-poster, because the debate should be seen in the light of that fact. We believe that every Conservative Member, and most Conservative peers, would prefer the third option—the buffers—rather than the other two more desirable options. We could then return to a closed-list system of one, as the Home Secretary elegantly described the first-past-the-post system. As the debate has proceeded, more and more light has come from the Home Secretary, and more understanding of our criticisms over many years of the current system.
The open-list system proposed by the Conservatives suffers several problems. It has a certain arbitrariness, particularly if it means that people are simply listed alphabetically, which would give highly random results. As my name begins with A, I should be all right, but I might find that aspiring young politicians were changing their name to Mr. or Ms Aardvark. The alphabetical soup of selection that might result is a substantial problem.
My right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) has pointed out the further problem that it would theoretically be possible


under the Conservative system for someone to be elected without any votes at all. If a single popular candidate received all the votes for his party, but that party received a substantial chunk of the total vote, some of the candidate's votes would be distributed to other candidates who had received no votes. The Belgian system seems preferable to that Finnish system with all its vagaries.
It is increasingly common to hear phrases such as "d'Hondt divisor" or "Sainte-Lague divisor" tripping from the tongues of Conservative Members. However, their background in proposing constitutional reform is not strong. The proposed closed-list system meets one—but only one—of our two objectives, which is that it would secure fairer representation so that every voter in the United Kingdom would have a vote that counted. Our second objective, however, is an increase in voter choice, and the closed-list system fails to take us closer to achieving that. All that can be said is that the proposals do not take us back to the closed-list system of one that exists under the first-past-the-post system, which is, in principle, equivalent to the system that would operate under the proposed closed-list system.
Hon. Members have asked what happens to people at the bottom of party lists. Under current procedures for choosing candidates for Westminster constituencies, those who come second or third in selection battles are denied any ability to put themselves forward to the voters. The arguments of the Conservatives have not seduced us into voting with the Tories tonight. Two parties stood for election on 1 May 1997 on the clear platform of pressing for fairer votes in the European elections. Those two parties secured about 60 per cent. of the vote, and that is a significant mandate. We feel anger and resentment at seeing the single party that tried to resist change at the general election continue to propagate its resistance through hereditary peers who have never stood for election.

Mr. Andrew Robathan: The hon. Gentleman makes an interesting case with which I disagree. The Conservatives lost about 4.5 million votes at the general election, for a wide variety of reasons. Why did the Liberal Democrat party lose 800,000 votes—quite a crash—if its policies were so popular?

Mr. Deputy Speaker: Order. We are not discussing any party's policy tonight.

Mr. Allan: I am grateful to you, Mr. Deputy Speaker, for preventing me from entering a debate into which I did not want to go and which would not be germane to the subject in hand.
Sixty per cent. of the electorate voted in favour of fair votes for the European election. A much smaller proportion voted against. Several of the smaller parties, such as the nationalist parties, shared our platform. We have a clear mandate, and the other place goes against that mandate at its peril in seeking to advance retention of the first-past-the-post system.
I have listened with interest to Labour Members. I do not seek to intrude on private grief, except to say that much of the criticism of the closed-list system is not criticism of the system in principle but of the practice

used by Labour in implementing it. The debate within the Labour party has saddened us. It does a disservice to PR in general when the public see Labour Members pulling each other apart over a system that the Liberal Democrats would not adopt. Our members would not have the closed-list system, and they would turf us out if we tried to introduce such a candidate selection process. Our party rightly demands one member, one-vote, and that is what happens in our selection process.
Labour's selection battles have done a disservice to the closed-list system. The system itself takes us no further back, but to accept it would be to miss an opportunity to extend voter choice. The Conservatives offer no such opportunity by introducing tonight's debate at such a late stage in the Bill's proceedings. The European elections will not give us all that we want. We would have liked to extend voter choice, and we shall press that point when we come to the review. However, we shall support the Government tonight to bring in the closed-list system now before we move on to argue our case at the review. Warm and welcoming though the offer was that we should join Conservative Members, we believe that they are clinging to an outmoded system that would deny UK electors the real worth of their votes next June. We do not support that system, and that is why we shall support the Government.

Dr. John Marek: My hon. Friend the Member for Walsall, North (Mr. Winnick) argued, with good grounds, that there is no majority in favour of the closed-list system in the parliamentary Labour party. Yet, he also argued that the Government would have a large majority tonight. I ask the House to think about that contradiction. If there is no majority in the Labour party, but the system is such that the Whips and the Patronage Secretary can dragoon Members through the Lobby—and I admit that I will be dragooned when the time comes—what legitimacy does the elected Chamber have in comparison with the unelected Chamber whose Members may, by and large, vote according to their own judgment on the right course of action for the country?

Mr. Hogg: Does the hon. Gentleman agree that there is a second difference? In the other place, most Lords actually listen to debate, but we will have a Government majority although there are no more than about six Labour Members in the Chamber at the moment.

Dr. Marek: I understand what the right hon. and learned Gentleman is saying, although I would not entirely go along with it because I am often working in my room with the new television system on, so I listen to many of the debates without being seen in the Chamber that often. Under the present system and the way in which we organise the House of Commons, it is not necessarily always right to say that the elected Chamber is superior to the unelected Chamber and must prevail.
I, too, have the highest regard and great admiration for my right hon. Friend the Home Secretary. He is often right, but on this occasion he is not. He has got it wrong. This policy was decided not by any vote within the parliamentary Labour party; it came down from on high, from the leadership, that there would be a closed list. Something may have been said about receiving opinion. It certainly received my opinion, but to no avail; we still have a closed list. There is no democratic system within


the Labour party for deciding by discussion and a vote whether an issue such as this should go one way or the other.

Mr. Grieve: Would the hon. Gentleman care to enlighten the House as to any reason that he can think of why the diktat came down from on high in the way that it did?

Dr. Marek: I shall not be sidetracked. Clearly there are issues central to Government policy where the Government will have to say that if we want them to govern, we have to support them. But my contention is that this is not an issue where the Government have to pronounce what they want and how they intend to achieve it and then use the Whips to dragoon their side through the Lobbies. This would have been an excellent example of where we could have had options A, B and C and a free vote of the House. I do not see what difference that would have made to the Government. We could have had the Belgian system, the House of Lords' system and the Home Secretary's closed-list system, and we would have had a much fuller House. The House would have been packed if we had had three options. That was done in the previous Parliament and it could have been done in this Parliament. It would make the House a better place if we empowered Members on both sides to use their judgment rather than be dragooned through the Lobbies.
My right hon. Friend the Home Secretary put forward a few arguments. He said that the authority of the House must prevail over the other place, then 10 minutes later he said that the Government consider that the closed-list system is right. He cannot have it both ways. It is perfectly right to argue the case as a member of the Government. I would have been happier if he had done so, having at least obtained the vote within the parliamentary Labour party. That is what happens in countries such as Australia and New Zealand. In most Commonwealth countries such matters go to a particular caucus. I do not know what happens in the Conservative party, but they do not go to any caucus in this party. However, my right hon. Friend cannot claim in aid the authority of the House and his authority as a member of the Government.
My right hon. Friend talked about the closed-list system of one. I thought that I was elected by an open-list system of one. It could have been ordered in any particular way. It was a list of one and it was completely open. Is my right hon. Friend trying to pull the wool over our eyes? Have I been labouring under a delusion? I have always thought that it was an open list; if people did not want to vote for me, they did not have to. If I am wrong in that logic, perhaps my right hon. Friend or the Under-Secretary will intervene and put me right. At the moment, I do not think that they intend to do that.
The last bit of obfuscation that we had from my right hon. Friend was that open-list systems are complicated and the British people are too stupid to understand them and do not like them. We hear that from all those who have an unsound case and want to pull the wool over people's eyes. It is not true. There are systems whereby one can vote for a particular party on the top row, and then have the opportunity to order candidates if one so wishes.
I think that I could have lived with the closed-list system if my own party's procedures in selecting candidates had been open, above board and honest,

but clearly they have failed to be so. For example, I took part in a vote, with many of my fellow members of the north Wales Labour party, for those whom we thought should be on the list for the Welsh constituency of five members. We voted for our sitting candidate, Mr. Wilson, by, I think, about 98 per cent., yet, at the last stage, after the matter went to Millbank tower, where heaven knows what happens, a candidate from across the border in England appears on our list in Wales in third position—[Interruption.] That is not a criticism; he could have been from Ethiopia. However, he came from outside the area; we in Wales had no knowledge that he was interested in being on the list in Wales; and he was not considered as one of those in contention for a place on the list by the Labour party members in north Wales. Yet there he is in third position and the candidate for whom 98 per cent. of Labour members in north Wales voted is in fourth position—an unlikely winning position for the Labour party in the elections.
That cannot be right. It is not open. There is no doubt about that. It is not democratic because 98 per cent. of Labour party members voted for somebody else. They did not vote for the candidate who was put in.
I fear that my party has sabotaged its argument for the closed-list system by the way in which it is selecting its candidates for the European elections. At the end of the day, if I have the choice, I am an open-list person.

Mr. Tim Loughton: I am following the hon. Gentleman's argument with great interest. Would he demur from what the Home Secretary was saying earlier and agree that by far the most democratic selection of candidates in his area of Wales will have come from the Conservative party in Wales or any other region of the United Kingdom, where every member had an equal vote in the selection of those candidates? Does he agree that that is by far the most appropriate system?

Dr. Marek: I am reminded that my Conservative opponent joined the Labour party yesterday for other reasons to do with the Conservative party's inability to form an Opposition. I am sorry about that because it ought to form an Opposition on this. I do not wish to be rude, but simply putting one's head in the sand and saying that one is for first past the post or nothing is not the best way of opposing what I think is a sleight of hand on the part of my right hon. Friend the Home Secretary and his Front-Bench team.
I agree that the system should be one member, one vote. If new Labour means anything, it means one member, one vote. But my hon. Friend the Member for Cardiff, West (Mr. Morgan) will tell the House that it is difficult to get one member, one vote in the election for Labour candidate for the National Assembly for Wales. Somehow or other, the Labour party, or at least Millbank tower, seems to think that new Labour and one member, one vote is all very well for certain things, such as getting rid of clause 4, but when it comes to electing the Labour candidate for the National Assembly for Wales, it is not the best system and we must consider all sorts of other possibilities.


The election that took place between my right hon. Friend the Member for Caerphilly (Mr. Davies) and my hon. Friend the Member for Cardiff, West in the summer had, as one section of that electoral system—

Mr. Deputy Speaker: Order.

Dr. Marek: Bear with me for 10 seconds, Mr. Deputy Speaker, because I am talking about open and closed lists. That election had something called party units where members have two or three votes, which was not right.
At one end of the spectrum, open lists give electors as much access as possible so that they can distribute their votes between the candidates according to their individual judgment. At the other end, one member, one vote puts everybody on an equal basis, with no weighting between one set of electors and another. Unfortunately, the closed-list system allows fixers to get their way, which is the real reason why I oppose it. As there is no possibility of the Government not having their way this evening, I hope that they have listened to what I and other hon. Members have said and that, in the 24 hours or so that remain, they will do something to get this measure right.

Mr. Sayeed: It is a great pleasure to follow the hon. Member for Wrexham (Dr. Marek), for this debate is not about proportional representation, despite what the hon. Member for Sheffield, Hallam (Mr. Allan) said, or about the House of peers, as the Home Secretary implied. The right hon. Member for Blackburn (Mr. Straw) is doubtless embarrassed to propose a system that most of his party thoroughly dislike. This debate is about the Government's decision to enact a system of closed lists, which shows a contempt for democracy and elevates the self-centred interests of the party machine above the wishes of the people.
In so doing, the Government misunderstand their duty. The duty of any Government is to look after the interests of the United Kingdom—which means everyone in the United Kingdom—not to look after the interests of the Labour party. We have seen examples of that in Scotland and Wales; in the fact that the Neill committee report appears to be cherry picked; in the debate on the House of Lords; and in the elections for a London mayor and a European Parliament. As the hon. Member for Wrexham made absolutely clear, there are different rules and interpretations of the rules by the Labour Government. The choices that they make are in the interests not of the country but solely of the Labour party. That is wrong.
If Ministers think that I am unfair, I ask them to consider this proposition. If a person in receipt of the Labour Whip, who was elected on a Labour manifesto, decided to stand for London or Wales and was the preferred choice of the Labour supporters in London or Wales, would the Labour party allow him, whether he was the hon. Member for Brent, East (Mr. Livingstone) or the hon. Member for Cardiff, West (Mr. Morgan), to stand in the Labour interest? [Interruption.]
The Under-Secretary of State for the Home Department, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth), appears to be leaving the Chamber. I doubt that a Minister will answer that

question, but the answer is probably that the executive of the Labour party, not Labour supporters, will decide who the candidate is.
Nothing more clearly shows the Government's determination to govern in the interests of party advantage than the shuttlecock passage of the Bill. Labour Members should not blame hereditary Conservative peers. It is worth repeating the words of the shadow Home Secretary, my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler). Lord Shore of Stepney, a Privy Councillor and for many years a Member of this House—highly respected, extraordinarily able and very honest—said:
But the dangers of cronyism, patronage and corruption are obvious in a system which concentrates power in such an important area on so few people who are basically self-selected. These seem to me to be very powerful reasons why we should not have a list system at all and why we certainly should not have a closed list.
Lord Evans of Parkside said:
There is little doubt so far as the Labour party is concerned that Labour candidates who are successfully elected to the European Parliament under this system will regard their responsibilities, so far as their future careers are concerned, to lie in obeying the demands and requirements of the National Executive Committee and the leadership of the party."—[Official Report, House of Lords, 12 October 1998; Vol. 593, c. 742-44.]

Mr. Allan: I do not wish to detract from the hon. Gentleman's arguments, which are a fair criticism of the way in which the Labour party has operated over selection, but does he agree that the same criticisms could be levelled against the Westminster selection system if the national executive committee of the Labour party or any other party chose to impose candidates in the same way? The problem is not the principle of closed lists but the way in which the Labour party has operated that system. That is not a PR issue.

Mr. Sayeed: The way in which the Labour party will operate the closed-list system is utterly objectionable and extraordinarily undemocratic. Most Labour Members believe that as well; I only wish that they would show it in their votes. There are profound objections to the closed list per se, but the way in which the Labour party is operating it is the worst of all worlds.
Lord Stoddart, referring to the Lords amendments, said:
What the amendments seek to achieve is to give the electorate a voice in who is elected to the European Parliament".
It is clear and simple—it is called democracy. A Liberal Democrat peer, Lord Russell, said:
The basic point is that democracy involves the right to choose both what party and what person will represent us".—[Official Report, House of Lords, 20 October 1998; Vol. 593, c. 1323–28.]
Not one of those speakers in the other place was a Conservative, and only one—the Liberal Democrat—was a hereditary peer, yet their views are clear: they are against the closed list, particularly the way in which the Labour party intends to operate it.

Mr. Robathan: Does my hon. Friend agree that it is depressing that Liberal Democrats in this place now kowtow so much to the Government that they will support them this evening, whereas some of their noble Friends are willing to stand up for their consciences and principles?

Mr. Sayeed: It may be disappointing, but it is not surprising.


Organisations outside this place are interested in democracy as well, although they may not be keen on my party. My right hon. Friend the Member for Sutton Coldfield has already quoted the Electoral Reform Society, which said of the closed-list system:
It is bad for voters, bad for candidates and bad for democracy.
Charter 88 said:
We believe that voters should be able to choose between candidates of the same party. We are especially concerned that voters are not given the impression that the new voting system is being introduced for party political benefit".
It went on to say:
We are concerned that if the government insist on the use of closed lists voters may be left with the impression that the voting system has been manipulated for party political aims".
If we continue with a closed-list system, voters would be right to believe that.
We must not leave out Lord Jenkins. I was interested to see how partial the Home Secretary's quotes were. I should like to give him one back, which supports the arguments that I have been making and that some of my hon. Friends will make.
Paragraph 138 of the Jenkins report states:
Under a reform system it is crucial that the voters' right to express their view of individual candidates should be at least maintained and preferably enhanced.
Jenkins goes on:
It would be a count against a new system if any candidate, by gaining party machine endorsement for being at the head of a list, were to achieve a position of effective immunity from the preference of the electorate. This is the essence of the case for open as opposed to closed lists".
I disagree with most of Lord Jenkins's report, but a phrase or two is rather good. That is one of them.
Lord Jenkins makes most elegantly the case against closed lists, which is simply that the person who is selected is selected by the party. Under the Labour operation of the closed list, the person who is selected is selected by the party machine. Therefore, that party clone will not be responsible to the electorate and will not have to take the will of the electorate into account; he will have only to keep the party bosses sweet.
We Conservative Members who believe that it should be our country first, our constituency second and our party last believe that a Government who operate so undemocratically and in a way that is so contemptuous of democracy should have any such proposal defeated. The Lords amendment should stand.

Mrs. Gorman: It is difficult to speak after the hon. Member for Wrexham (Dr. Marek). His honest description of what goes on in the Labour party was a most amazing insight into the true workings of the Government party and the way in which it seeks to control every aspect of the administration of its party affairs. A spillover of that into the way in which people are able to show their support for individual candidates is a serious matter for us all.
The hon. Member for Walsall, North (Mr. Winnick) of course touched his forelock to the Home Secretary, as is often the way of those on the Back Benches, and told us what a wonderful fellow he is, but his presentation bordered almost on megalomania at times. It was, "Ve vill

haf vays of making you vote." The system seems to be, "You vill get no choice of candidate." That is far from being a reputable performance from the Home Secretary.
Even when there were many more Labour Members in the Chamber than at present, the Home Secretary was unable to get a single supporter from his own side. He had possibly one watery supporter, but most Labour Members are obviously strongly opposed. I applaud them for that, because we all know that that will not do their career prospects a great deal of good.
If we want to know what is really happening, we can pray in aid the situation in Wales, which has already been well described, and let us not forget London, where another candidate, who is apparently not looked on particularly favourably by the Labour Administration, is struggling to become a Labour candidate. Those difficulties are not present in the Conservative party. For that reason—although we deplore the proposed system—we are in favour of open lists.
Labour Members suggested that we were inconsistent because we favour a closed, one member voting arrangement for the parliamentary elections, but they destroyed their own argument. As they pointed out, the member who emerges as a candidate for the parliamentary election goes through a democratic primary—certainly in the Conservative party, where all members of an association choose from a variety of candidates. Any member of the public is welcome to join the Conservative party and take part in that process. For the Home Secretary to pray in aid that argument in an attempt to denigrate the principled position taken by Conservative Members is simply nonsense. It does not hold water, even with his own Back Benchers.
The Home Secretary went on—this was very disturbing—to complain bitterly that the public do not turn out to vote in European elections. In my view of democracy, people have the right to vote for "none of the above". If they regard an election as irrelevant to their life style, or as something that they deplore, absence from the voting booth is itself a public demonstration of their attitude to the institution that they are being asked to support.
I do not, as the Home Secretary seems to do, denigrate people's unwillingness to come out and vote. I wish that the right hon. Gentleman he had shown a little more courtesy, and shown less arrogance and a less patronising attitude, towards the voters of this country, but I do not need to touch my forelock to him, because he is not likely to affect my promotion chances. [HON. MEMBERS: "What chances?"] Indeed, I am a demonstration of the fact that this democratic party tolerates the dissident voice on certain matters. Here I am in the Chamber, strongly supporting the case that was made earlier by my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler).
There is not much to add after the demonstration and the remarks from Labour Members, except to mention the Liberal Democrats and their love affair with Brussels. Brussels makes decent truffles, but I do not know what else it does, except deal in the most ludicrous political trifles. For the Liberal Democrats to pray them in aid tells us how much notice we need to take of that party.
I hope that the Home Secretary will think again, because he is showing contempt for the democratic process—not only to the electorate, but to those within his party and in the other place. For him to suggest that


the life peers—large numbers of whom have recently been placed in the Lords under the patronage of the Prime Minister in a manner that would have made Lloyd George blush—are an alternative to the present system is a travesty.

Mr. Clifton-Brown: The Government have created a chimera in the European Parliamentary Elections Bill, which they will come to regret. We are not considering a choice between the status quo and an alternative, but a choice between the closed and open-list systems. The problem is that both systems will alienate the electorate, and will have the effect of lowering the already low turnout for European elections. Both systems are less democratic than the present system.
The Home Secretary proudly came to the House tonight with the announcement that this time it would be all right to overrule the Lords amendments, because he intended to have a review. When I asked him on what criteria the review would be based, he would not answer me. Will it be a 30, 25 or 20 per cent. turnout? Will it be on the basis that the closed system will result in the election of more Labour MEPs than the open system? We do not know, because he has not told us. The closed system concentrates power in the hands of the Executive even more than the present system.
What will happen if a Labour MEP elected under the closed system dies or resigns? The electorate will not decide the alternative: someone else on the Labour list will be substituted. What is to prevent pressure from being put on a wayward Labour MEP who does not conform to Labour party policy to resign, so that someone else can be put in his place? What is to prevent the Labour party executive from downgrading people such as Christine Oddy, whom my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) mentioned, so that they are so far down the list that they will never be elected?
The closed-list system concentrates huge power in the hands of the Labour party executive. That cannot be democratic. The closed-list system is secretive: we do not know what is going on in the minds of the electorate.
The Home Secretary said that the public in large Euro-constituencies would be confused by ballot papers with a huge number of names. That is extremely patronising. The electorate will certainly be able to make a choice under an open system and to decide for themselves whom they want to elect.

Mr. Sayeed: The Home Secretary has obviously never seen a ballot paper in India. Ballot papers in India, where most of the populace cannot read and write, sometimes have 14 or 15 names. There are symbols for the candidates. The Indian people manage to vote, and they do so in large numbers. In the United States, the ballot papers have a long list of names. My hon. Friend is right to say that it shows great contempt for the electorate in this country to suggest that they cannot deal with large ballot papers.

Mr. Clifton-Brown: I agree with my hon. Friend that the Labour party is contemptuous of the electorate, as it has been on the other constitutional changes that it has proposed. One day, the electorate will wake up and chuck out the Government for that very reason.
The hon. Member for Wrexham (Dr. Marek) has whistle-blown in no uncertain terms. He has clearly shown us how the Labour party will operate in its selection of candidates under a closed list. It is secretive and undemocratic. It is trying to prevent the hon. Member for Cardiff, West (Mr. Morgan) from becoming the prime candidate in Wales, and it is trying to prevent candidates from being selected for the post of Lord Mayor and for the European Parliament. It is a control freak to the highest degree.
As for the Liberal Democrats, they have no principles whatever. In their desire to gain Cabinet seats, they are facing both ways, as they do time and again. Men of principle in the other House are prepared to say what they think and to vote the way they think. In this House, Liberal Democrats say one thing and vote differently.

Mr. Allan: We have expressed our firm view that we want fair votes for the European elections. We are working on the basis of that principle, but we take a pragmatic view of the fact that we have 46 Members of Parliament and we do not yet form the Government.

9 pm

Mr. Clifton-Brown: If the way in which Liberal Democrats vote is based on the fact that they have only 46 Members of Parliament, I invite them permanently to vote with the Opposition and they may see some worthwhile change. We do not know which way they will vote on any particular issue. I have no doubt that some of them will vote one way this evening, and some will vote a different way—we shall see.
The Government have not given us a real choice. Unfortunately, they do not intend to have a proper review of the election next June, so that they can decide whether the open or the closed-list system has worked or is likely to work, and if not, whether it would be desirable to go back to the first-past-the-post system. If they want to keep a genuinely open mind—

Mr. David Drew: Will the hon. Gentleman give way?

Mr. Clifton-Brown: I shall give way to my neighbour in a minute. He should not get so excited.
The Labour party should keep a genuinely open mind on this matter. The Home Secretary has made it clear that any change to the system would require legislation, so it would require legislation to change from a closed to an open-list system or to change back to the first-past-the-post system. The matter would have to come back to the House and the other place for a change in the primary legislation. Why can the Minister and his hon. Friends not tell us this evening why there cannot be an open review of the operation of the system next June?

Mr. Drew: rose—

Mr. Clifton-Brown: I will give way to my next-door neighbour.

Mr. Drew: I honestly do not understand what the hon. Gentleman is saying. The whole point of the proposal is that it gives the opportunity for a full review. That was said on Second Reading, and is now explicit in the House.

Mr. Clifton-Brown: That is a question for the hon. Gentleman's colleague, the Under-Secretary, to answer


later. I understood from what the Home Secretary said in opening the debate that the option of the first-past-the-post system was not to be considered under the review. If I have misunderstood the system, no doubt the Minister will either intervene now or, when he winds up, make the position entirely clear. The electorate deserve to know.
Is the Minister going to intervene? If not, we must assume that we do not have a full and open review, and that the first-past-the-post system will not be an option.
In short, what we are asked to decide on this evening is a pig in a poke. The electorate will have their say. I believe that next June's elections will be a thorough muddle, and I hope that one day my own party, when re-elected, will consider changing the system back.

Mr. Lansley: I am pleased to follow my hon. Friend the Member for Cotswold (Mr. Clifton-Brown), who eloquently presented some of the difficulties posed by the Government's proposals.
In a sense, the debate differs from our earlier debate on this House's disagreement with a Lords amendment. The Government are now proposing an amendment in lieu. Nevertheless, the motion strikes me as a transparent effort to cause their Lordships to change their minds about an important amendment that they have tabled, and I think that it has much more shadow than substance. Effectively, by virtue of the review, the Government are merely setting out to say to the Lords, "Give us an excuse to move from your resistance to the closed-list system."
As was made clear in the opening exchanges with the Home Secretary, the review itself could not give rise to a change in a subsequent electoral system, except by virtue of future primary legislation. The Home Secretary said, in response to an intervention, that, if there were a need for a review, it would arise from great public anxiety about the result.
The issue is this. Must we go through the process of an election through a closed-list system, with all the difficulties that will ensue when voters go into the polling booth and are presented with a ballot paper that gives them no opportunity to choose between candidates standing for a party? I confidently predict that there will be a great deal of public anxiety after that; but we have to have a review, and the prospect of taking on the burden of primary legislation, in order to make a change.
I know, and the Government know perfectly well in their heart of hearts, that the process of securing primary legislation is long and difficult, as the Bill amply demonstrates. They will not readily concede that, and—as I am sure Ministers, in their hearts, understand—they are not contemplating changing the electoral system after the European parliamentary elections next June; they are merely offering a device through which they can continue to send the proposals back to the Lords. This is not a realistic review. In truth, we are thrown back on arguments that have been rehearsed here previously, and have been amply argued in another place: the arguments for a closed list and for an open list.
When I read the debate that took place in the Lords last Wednesday, I see that their lordships did us the service of reading carefully the arguments presented in the House of Commons. Lord Shore explicitly said that he had looked carefully at what the Home Secretary had had to say before, to see whether there was a new argument that

would justify his changing his mind. He did not find one then, and I submit that he will not find one when he comes to read this debate.
We should examine very carefully the Home Secretary's arguments in favour of the closed-list system. Even in our earlier debates, the right hon. Gentleman has got away with a few arguments that he should not have got away with. Let me take the first one, which I think is the most important. On that occasion, and on previous occasions, the Home Secretary has argued that a perverse result can arise from the open-list system—that it is possible for someone to be elected with fewer preferences than someone who is not elected. It is undeniably true that, statistically that can occur. However, two arguments wholly countermand the Home Secretary's argument. The first is this. In the open-list system, we can at least see what the preferences of voters are as between the individual candidates of a party.

Mr. James Clappison: Within a party.

Mr. Lansley: Within a party. My hon. Friend rightly corrects me. In a closed-list system, we cannot see what the voters' preferences are between candidates within a party. Therefore, some highly perverse results may occur under a closed-list system: candidates may be elected who are deeply unpopular with the voters who support a given party. Indeed, the arguments that we have been hearing from hon. Members in previous debates suggest that that may be the case—what the hon. Member for Cardiff, West (Mr. Morgan) referred to as the Mickey Finn slipped into the system is precisely that sort of person. However, it is important that we understand that the closed-list system, far from being without perverse results, simply hides the perverse result.

Mr. Swayne: Will my hon. Friend accept that, although it is not an edifying sport, the British electorate like to pick off unpopular candidates in an election?

Mr. Lansley: I am grateful to my hon. Friend. I am sure that he is right. He may want to elaborate exactly that point.
The second point is that the fact that, under an open-list system, a candidate with relatively few preferences might get elected, arises from the fact that another candidate on that same party's list attracts a large number of preferences. We are dealing with a proportional system. I am not here arguing the merits or otherwise of a proportional system, but it is a proportional system. The Home Secretary argues that most voters are guided by party rather than personality, as it were—that they vote for party first. Indeed, it will be true that, by some mechanism, under an open-list system, the parties will contrive to present perhaps well-known candidates, or candidates to whom they give the greater part of their publicity, and that there will be a candidate on that party's list who secures the greater number of preferences. It may be a much greater number than some other candidates on the rest of that party's list.
Out of the fact of proportionality, arises the fact that that party has to attract a certain number of seats. It may be that individual preferences within that party for that candidate are relatively few, but the fact that that party attracts a large number of votes gives the reason why it


attracts that seat, so the result is not wholly perverse. The individual preferences for a less preferred candidate on a party's list would not necessarily lead voters to conclude that another candidate on another party's list is in fact preferred to someone who has relatively few preferences within the list of the party to which they subscribe.
I am sorry that that is a slightly elaborate argument, but I see that the Under-Secretary of State for the Home Department, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth) at least understands my point. Therefore, it seems that the first and, in fact, most often repeated argument that the Home Secretary has presented against an open list is not a good argument.
The second argument that the Home Secretary now presents is that to change would be disruptive. He will know that party machines often try to persuade one that to change things, especially to change things when they have started down a particular track, is highly undesirable. The more determined a party machine is to have its way, the more likely it is to argue that to change now would be disruptive.
The fact is that party machines can be surprisingly flexible when the occasion demands. The last thing that we should do is to change the view of what is the most acceptable electoral system by the standards of the voters just to meet the demands of party machines that find it inconvenient at a late stage to move from this proposed system to another one. It is perfectly clear what voters would prefer. Way back in February, the Electoral Reform Society undertook some research with the McDougall Trust. The findings showed that
although voters claim to vote on the basis of a party, they react strongly to the removal of the right to select a candidate for themselves.
9.15 pm
The Home Secretary said that voting for a party is not an alien system—in a sense he is right because most voters choose a party—but not to have an opportunity to vote for a candidate of choice is an alien system in this country. Let me repeat a point that I made during a previous debate on the subject: for voters to be presented with a choice of party but not the ability to vote for the candidate whom they recognise as a personality seeking their vote, is an alien system. The divorcing of candidate from party would be new and would be regarded as wholly undesirable by the electorate. So the argument about disruption is not true.
Other hon. Members have rightly said, that to argue that voters would be confused, and the way in which they cast their vote arbitrary, is dismissive of voters' behaviour. In fact it is wrong because, if an open list demands it, party systems will be extremely good at presenting the electorate with information about candidates. As it happens, that is an argument for an open list. Under a closed list, one has to tell the voters not about the candidates, but only about the party. Under an open list, one has to tell voters about candidates and give them information. There may be a relatively small turnout at a European election, but it is likely to be an informed turnout. Voters are more likely to be informed of the respective merits of candidates under an open-list system.
If those arguments do not have credibility as the reasons for the Home Secretary's opposition to an open-list system, what is it all about? Hon. Members have

made it clear—I agree with them—that it is all about reasserting the control of the party machine over the outcome of the election. The voters who support the Labour party are not to be given an opportunity to substitute their choice for the choice of the party machine in Millbank tower. That is what it is all about. The other arguments do not sustain the Home Secretary's opposition to an open-list system. That is the only rationale for persisting in the self-evidently misjudged proposal for a closed-list system. The Labour party's machinations, its outrageous system for the selection of candidates and its manipulation of the closed-list system bring into disrepute the Home Secretary's proposal, and the House would be wise to reject it.

Mr. Swayne: I always find the Home Secretary persuasive and I found him so again this evening. Particularly persuasive was his argument that this is all a question of horses for courses. There is something to be said for the horse that he has selected for this course.
I come to the argument from a slightly different point of view. I remember the time in 1975 when Roy Jenkins, as he then was, said that it was inconceivable that we would have direct elections to the European Parliament. I found some comfort in that. I have difficulty with the concept of a European Parliament as I have never felt that there was a European people for that Parliament to represent. It struck me that there was something eminently sensible about the system of nominating representatives to the European Assembly. There is something attractive, therefore, about the closed-list system proposed by the Home Secretary because it is almost a return to a system of nominating delegates.
We come to the Bill late in the day and we have to accept most of it as we find it. Although we are given a certain latitude with the amendment before us, the rest of the Bill remains the same. Part of that is the absurdly large constituencies which, in my case, involves a constituency stretching from the Isle of Wight to Milton Keynes. I appreciate the amount of chaos—if, indeed, it is possible to measure chaos—mentioned by the Home Secretary. However, what of the chaos of having 11 Conservative candidates in the election in my region, campaigning against one another to secure a higher preference?
The Home Secretary's arguments were persuasive, but not quite persuasive enough. We have to weigh against the Home Secretary's arguments the corrosive and corrupting effect of centralising power under political parties—something that has been drawn to our attention, in a most staggering way, in both this debate and last week's debate, by the hon. Member for Wrexham (Dr. Marek). Selection of candidates for the election has been a quite extraordinary process. The House owes Labour party members another opportunity to be liberated from the tyranny that they have imposed upon themselves in Wales, in London and in arrangements for the European elections.

Mr. Clifton-Brown: And in Scotland.

Mr. Swayne: Indeed, and in Scotland. However, I shall confine myself to the matter that we are debating.
As my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) said, in his most recent report, Lord Jenkins drew attention to the matter of open and


closed lists. It is all very well for the Home Secretary to go on, as he has today, rubbishing an open-list system. However, in his report, Lord Jenkins was quite clear on the distinction between open and closed lists. On page 41, he said:
It would be a count against a new system if any candidate, by gaining party machine endorsement for being at the head of a list, were to achieve a position of effective immunity from the preference of the electorate. This is the essence of the case for open as opposed to closed lists".
Lord Jenkins may have written his report with Westminster elections in mind, but there is no reason why the report's principles should not apply as much to Westminster elections as to European parliamentary elections. I reject the report in total. I am not in favour of the Jenkins report. Nevertheless, I am absolutely certain that Lord Jenkins was right in his preference for open over closed lists.
A hugely important principle is at stake. Although the Home Secretary's arguments were persuasive, they failed to persuade us that a dreadful precedent will not be set in using closed lists in democratic elections. Closed lists abolish completely any concept of representative democracy. How can one possibly have a representative whom one has not specifically voted for or against? Representative democracy is posited on the existence of candidates on a list, and to do away with candidates in closed lists is to do away with representative democracy.
There is some merit in the argument that there will be chaos in huge constituencies in which candidates from the same party compete against one another. An equally powerful case could be made that political parties—in the views that they are expressing on the issue that will be addressed next June—are not entirely consistent and homogenous within themselves. The Conservative party has a number of views on the future of the European Union. I am glad to say also that democracy is not dead among Labour Members, who still offer a variety of views on the matter. It is therefore entirely appropriate that people should be able to select candidates on the basis of how close a candidate's view is to their own. There will undoubtedly be candidates who are particularly enthusiastic about the current development of the European Union. just as there are candidates who are unenthusiastic about it. It is entirely appropriate that those candidates should make their opinions known and should seek votes accordingly. I suspect that that will do much more for voter turnout than denying voters a choice would.

Mr. Allan: Is the hon. Gentleman saying that he is now a convert from the first-past-the-post system, whereby the voter has no choice but simply has to accept a Euro-sceptic, a Europhile or whichever single candidate is presented by each party?

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The hon. Gentleman has strayed outside the terms of the amendment. I hope that the hon. Member for New Forest, West (Mr. Swayne) will not follow him.

Mr. Swayne: I should dearly love to follow the hon. Member for Sheffield, Hallam (Mr. Allan) down that track, Mr. Deputy Speaker, but of course I shall not.
I admitted that the Home Secretary was persuasive in many respects, but, in spite of that, the case for open democracy—within the parties and, beyond, to the electorate—has been made very clearly. The House should agree with the Lords in their amendment.

Mr. Clappison: The Home Secretary said that we were going over well-trodden ground. That may be so, but the debate has reflected the widespread concern about the course that the Government are following, and their choice as between open and closed lists.
Once again, there has been no support, from any corner of the House, for the principle of the closed list. There was no support for it in the interventions or the substantive speeches of Labour Members. The hon. Member for Walsall, North (Mr. Winnick) once again made it clear that he does not support the principle of a closed list. The hon. Member for Wrexham (Dr. Marek), in what the House will agree was a highly principled speech, expressed the unease that he and many colleagues feel. He spoke for many people when he put the issue in the context of other changes that are taking place.
We also heard excellent speeches from various Conservative Members. My hon. Friend the Member for Mid-Bedfordshire (Mr. Sayeed) made a cogent and well-researched speech, and was right to draw attention to the authoritative voices that have spoken out against the principle of the closed list. My hon. Friend the Member for South Cambridgeshire (Mr. Lansley) made a reflective and closely argued speech, in which he demolished the Home Secretary's arguments. I shall deal with some of those arguments in a moment. We also heard excellent speeches by my hon. Friends the Members for Cotswold (Mr. Clifton-Brown), for Billericay (Mrs. Gorman) and for New Forest, West (Mr. Swayne), who all spoke with real conviction.
It was ludicrous for the Home Secretary to suggest that the debate was got up by hereditary Conservative peers. It might be convenient and easy for the Home Secretary to take that line, but it does not do justice to the merits of the Lords amendment or to the principle at stake. The House of Lords has reflected the widespread concern that is felt not only in both Houses of Parliament but outside, by many organisations that are interested in electoral matters but which take no particular party line.
As the Home Secretary knows full well, the principle at stake is whether voters should have a choice of individual candidates, or whether only parties should appear on the ballot paper. It is unwise for him to keep on trying to demolish particular forms of the open list offered to the Government as variations.
At the beginning of the whole process, the Government had a choice. They had made a bald commitment to change the system, and had the choice of adopting an open or a closed-list system. The Government decided to go for a closed-list system, which was very instructive about their priorities. Since then, the Home Secretary has said that various systems are too difficult for us to understand. That is an insult to the House and the British people.
How is it that so many other countries in the European Union struggle along with an open-list system? Why is it that an open-list system is not invincibly difficult for voters in Austria, Belgium, Denmark, Finland, Italy,


Luxembourg and the Netherlands? Why is it that voters in those countries can cope with an open list, but voters in the United Kingdom cannot?
The Home Secretary tried to draw comfort from other countries in the European Union that have a closed list, but he will know that it is a different system from that proposed, as it operates at a national rather than regional level. The fact that the proposed system operates at a regional level makes it even more conducive to centralised party control.

Mr. Straw: How?

Mr. Clappison: I refer the Home Secretary to the excellent work of the constitution unit. It makes it more difficult for smaller parties to stand, as they have to obtain a higher threshold of votes to achieve representation. A regional closed-list system is a double whammy for party control. That is what the debate is all about, as was made clear by the interventions that the Home Secretary took from the hon. Members for Blaenau Gwent (Mr. Smith) and for Cardiff, West (Mr. Morgan), among others.
In more forceful terms even than we would have used, they sought to characterise the closed-list system as one in which centralised party control and opportunities for cronyism are rife. As the hon. Member for Cardiff, West said, it is a system that makes it possible for party bosses to slip a Mickey Finn into the list, without the voters being able to do anything about it. As a result, in the fulness of time, MEPs will represent their party bosses rather than the voters of their region, and there will be no incentive for individual MEPs to stand up for the interests of their region or their constituents. They will be totally beholden to and owned by the party bosses.
That point has been made clear tonight. It puts the debate into a wider setting, and is certainly consistent with the pattern of behaviour of the Labour party in an increasing number of other settings, such as London and Wales, as my hon. Friend the Member for Billericay said.
If we need any more evidence that the proposal is all about exerting centralised party control, we can find it in the way in which the Labour party has chosen its candidates. The Home Secretary was right to say that those are internal Labour party matters, and we do not propose to venture into them, but they supply compelling evidence. Unlike Liberal Democrat and Conservative Members, who are individual party members who have had the opportunity to have a say, Labour Members have had no such opportunity.
The Home Secretary's argument about party lists was well demolished by my hon. Friend the Member for South Cambridgeshire, who drew attention to the important fact that, at least, within an open-list system, after the party bosses had drawn up the list, the voters would have the opportunity to express a preference for candidates on the list. In the closed-list system, that is not possible.
My hon. Friend the Member for South Cambridgeshire asked whether the Home Secretary's amendment in lieu was transparent and could be relied on. Given the history of the year in which we have debated the matter, I do not think that it could. The Home Secretary said that he had always been consistent. We recall his words on Second

Reading. He may have been consistent by his own criteria, but we recall a slightly different tone being set in those early debates, when he boasted about the consultation that was taking place. On Second Reading, he told us that he had an open mind on these matters, and that, although he had a preference, he was prepared to listen to the arguments. He even put a paper in the Library—

Mr. Straw: Is the hon. Gentleman criticising me for that?

Mr. Clappison: The Home Secretary asks whether he is being criticised. It is a matter of record that he said that he was prepared to listen. We believe that every representation that he has received from Labour Members, from Conservative and Liberal Democrat Members and from every outside organisation, is against the principle of the closed-list system, yet the Home Secretary and the Government decided to adopt that principle even though everyone else was against it. The Home Secretary discarded the Belgian system for reasons that he knew all about in the first place, and did not look at the other seven EU countries that also had a modified form of the open-list system. They were all cast aside. Every system has been ridiculed as far too complicated and difficult for voters to understand.
If Labour Members want to set any store by the amendment, they should look at the earlier amendment that was tabled by their own Back Benchers, calling for an evaluation by the Home Secretary of the open-list system after the elections had taken place. The amendment was tabled by the hon. Members for Stroud (Mr. Drew) and for Enfield, Southgate (Mr. Twigg). It was an honourable attempt to give the Government the opportunity to think again, but they refused to do so.
That adds force to the point made by my hon. Friend the Member for South Cambridgeshire, who has drawn attention to the fact that the Government's proposal means that primary legislation would be required for a change to be made. If the Government had been prepared to listen to the arguments, they could have had a report ready by now, and implemented its conclusions in the Bill at this stage. However, they were not prepared to listen.
The real motive throughout has been to enhance centralised party control. This is a revealing glimpse of the real character of new Labour—more opportunities for cronyism and for centralised party control. We would do well to reflect on the widespread concerns outside the Chamber, and consider carefully the Lords amendment, which gives us an opportunity to have an open-list system. We do not prefer that to a first-past-the-post system, but it would strike a blow against centralised party control.

The Parliamentary Under-Secretary of State for the Home Department (Mr. George Howarth): I shall be brief. We have discussed the nature of the list system at every stage of the Bill's passage through the House, and everything that needs to be said has probably already been said.
The Government remain strongly of the view that the list system for which the Bill originally provided is the most appropriate for Britain to use to elect our Members of the European Parliament. I am afraid that the right hon. Member for Sutton Coldfield (Sir N. Fowler) and his hon. Friends have not understood that we are talking


not about elections to this House or to local councils, but about elections to the European Parliament, where 84 people represent the whole of Great Britain. Once they are elected, the MEPs do not perform the constituency functions that are familiar to members of this House, because the European Parliament is not responsible for housing, social security, individual employment matters, education or any of the issues that provide us all with so much of our constituency case work.
The public have far less opportunity to get to know the MEPs and aspiring MEPs in their region.

Mr. Clifton-Brown: rose—

Mr. Howarth: I shall come to the hon. Gentleman in due course. I shall let him in if there is time.
If the Lords amendment were accepted, voters would be forced to choose between candidates of the same party, which would inevitably involve some arbitrary and irrational choices. If anyone doubts that, they should bear in mind my experience during the 1970s, when I was a member of a local authority in a six-member ward. Every four years, two of us stood for election. My fellow Labour candidate was always Maurice Spillane, the local chemist, who, sadly, has since died. Every time that we stood in tandem, I came first because the first letter in my surname is "H", and Maurice Spillane came second. Thankfully, we were always both elected—it would have been surprising in that ward had we not been. Although I fondly believed that I always managed to beat him because of the sheer force of my personality, the truth is that it was because my name began with "H".
That will happen again. The evidence shows incontrovertibly that the choices would be exercised to the detriment of female and ethnic minority candidates. The Government are not prepared to countenance that.
There is also the problem that the open-list system, which the other place wants to introduce, might well—in fact, probably would—produce perverse results. My right hon. Friend the Home Secretary carefully demonstrated how the candidate who receives the most votes might not win a seat. I genuinely ask Opposition Members to consider the implications of that.
Much has been said about how electors will feel about not having a choice between named candidates. Such criticism deserves an answer. Having chosen a candidate, how would a voter feel when he or she found that the majority of people who voted chose the same candidate, yet that candidate was not elected? That is not just a fanciful notion; it could happen if the system proposed in the other place were adopted. That argument is incontrovertible.
I turn to the passionate speech of my hon. Friend the Member for Walsall, North (Mr. Winnick), which demonstrated his commitment not just to the House but to many other issues. He is a very passionate democrat. I enjoyed his speech, although I obviously did not agree with all his conclusions. As a democrat, is he prepared to abstain, as I think he said he would—even abstention would be an endorsement of the proposal—or to support in the Lobby a vote that was won in the House of Lords on 20 October by a majority of 44 simply because hereditary peers took part? On 4 November, there would not have been a majority of 29 without the intervention of hereditary peers. I ask him to reflect on that. I would be very happy if he joined us in the Lobby.
I turn to the thoughtful speech of the hon. Member for Sheffield, Hallam (Mr. Allan), who showed a far greater understanding of the systems than any Conservative Member, including those on the Front Bench.

Sir Norman Fowler: indicated dissent.

Mr. Howarth: If the right hon. Gentleman does not accept that, he should compare the speech of the hon. Member for Hallam with his own. It will become clear to him that the hon. Gentleman knows what he is talking about.

Sir Norman Fowler: Will the Minister explain why, in two debates, not a single Labour Back Bencher has spoken in favour of the Front-Bench spokesman?

Mr. Howarth: I refer the right hon. Gentleman to the Division Lists. My hon. Friends indicate their assent by the way in which they vote at the end of the debate.

Mr. Edward Garnier: Now say that with a straight face.

Mr. Howarth: I do say it with a straight face.
I turn to the speech of my hon. Friend the Member for Wrexham (Dr. Marek). I should like to pick him up on one point. If I heard him correctly, he said that he was elected on an open list of one. He will correct me if I am wrong, but when the good people of Wrexham went to the polling booth, they found that he was the only Labour candidate on the ballot paper. He therefore stood on a closed list of one. I do not think that he can argue with that.

Mr. Clifton-Brown: Will the hon. Gentleman give way?

Mr. Howarth: I am coming to my comments on the hon. Gentleman's speech. If he is not happy after I have made them, I shall give way to him.
For three consecutive parliamentary evenings, I have sat here and listened to speeches by the hon. Member for New Forest, West (Mr. Swayne). Although I have not agreed with them, I must admit that they have improved each evening. However, they started from a pretty low point. I make this as a political point, and would not want it to be misunderstood as anything else, but I have a fear that I shall share with the House. It is that, when I wake up in the middle of the night I shall see before me a vision of the hon. Gentleman speaking, because it seems as if, every time I look up, there he is. Despite that, I enjoyed his speech tonight.
The hon. Member for Cotswold (Mr. Clifton-Brown) asked about what my right hon. Friend the Home Secretary said about the review that will take place after the European elections to see how the system has worked in practice. I shall not add to what my right hon. Friend said, but as the hon. Gentleman asked about it, I shall make clear the intention behind the review. There will be a full and thorough review of the operation of the system. Nothing should be ruled out, and that includes comparisons with the way in which other systems might hypothetically have worked.

Mr. Drew: Will my hon. Friend give way?

Mr. Howarth: I shall not, if my hon. Friend will forgive me, because the House has further business to deal with after the debate.
We have introduced an amendment that will ensure that, after the first elections using the system, a review will take place. I hope that, when our proposal is considered in another place, careful account will be taken of that commitment.
To elect their Members of the European Parliament, almost all the larger states of the European Union already use the system that the Government propose. It is true that nine member states use open or semi-open-list systems, but, with the exception of Italy—which I might venture to suggest offers no lessons when it comes to electoral systems—all those countries are small, and their political traditions are different from ours.
For all those reasons, the House should reject the amendments that were made to the Bill in another place thanks to the votes of those who have never been elected to any Parliament. We believe that the system that the Bill provides is appropriate and simple, and offers no prospect of perverse results. The idea that unelected hereditary peers can overturn the type of democratic system that the House proposes is too bizarre to contemplate.

Question put, That this House insists on its disagreement with the Lords in their amendments:—

The House divided: Ayes 307, Noes 125.

Division No. 373]
[9.47 pm


AYES


Abbott, Ms Diane
Buck, Ms Karen


Adams, Mrs Irene (Paisley N)
Burgon, Colin


Ainger, Nick
Butler, Mrs Christine


Ainsworth, Robert (Cov'try NE)
Byers, Rt Hon Stephen


Alexander, Douglas
Caborn, Richard


Allan, Richard
Campbell, Alan (Tynemouth)


Allen, Graham
Campbell, Mrs Anne (C'bridge)


Anderson, Janet (Rossendale)
Campbell, Ronnie (Blyth V)


Ashdown, Rt Hon Paddy
Campbell-Savours, Dale


Ashton, Joe
Caplin, Ivor


Atherton, Ms Candy
Casale, Roger


Atkins, Charlotte
Caton, Martin


Barron, Kevin
Chapman, Ben (Wirral S)


Battle, John
Chaytor, David


Beard, Nigel
Clapham, Michael


Beckett, Rt Hon Mrs Margaret
Clark, Rt Hon Dr David (S Shields)


Beith, Rt Hon A J
Clark, Dr Lynda


Benton, Joe
(Edinburgh Pentlands)


Bermingham, Gerald
Clark, Paul (Gillingham)


Berry, Roger
Clarke, Charles (Norwich S)


Best, Harold
Clarke, Eric (Midlothian)


Blackman, Liz
Clarke, Rt Hon Tom (Coatbridge)


Blears, Ms Hazel
Clarke, Tony (Northampton S)


Blizzard, Bob
Clelland, David


Blunkett, Rt Hon David
Coaker, Vernon


Boateng, Paul
Coffey, Ms Ann


Borrow, David
Coleman, Iain


Bradley, Keith (Withington)
Connarty, Michael


Bradley, Peter (The Wrekin)
Cooper, Yvette


Bradshaw, Ben
Corbett, Robin


Breed, Colin
Corston, Ms Jean


Brinton, Mrs Helen
Cox, Tom


Browne, Desmond
Cranston, Ross


Bruce, Malcolm (Gordon)
Crausby, David





Cryer, Mrs Ann (Keighley)
Illsley, Eric


Cummings, John
Ingram, Adam


Cunliffe, Lawrence
Jackson, Ms Glenda (Hampstead)


Cunningham, Jim (Cov'try S)
Jackson, Helen (Hillsborough)


Cunningham, Ms Roseanna
Jamieson, David


(Perth)
Jenkins, Brian


Dalyell, Tam
Johnson, Alan (Hull W & Hessle)


Darling, Rt Hon Alistair
Johnson, Miss Melanie


Darvill, Keith
(Welwyn Hatfield)


Davey, Valerie (Bristol W)
Jones, Barry (Alyn & Deeside)


Davidson, Ian
Jones, Mrs Fiona (Newark)


Davies, Geraint (Croydon C)
Jones, Helen (Warrington N)


Dawson, Hilton
Jones, Ms Jenny


Dewar, Rt Hon Donald
(Wolverh'ton SW)


Donohoe, Brian H
Jones, Jon Owen (Cardiff C)


Dowd, Jim
Jones, Martyn (Clwyd S)


Drew, David
Jones, Nigel (Cheltenham)


Drown, Ms Julia
Jowell, Ms Tessa


Eagle, Maria (L'pool Garston)
Kaufman, Rt Hon Gerald


Edwards, Huw
Keeble, Ms Sally


Efford, Clive
Keen, Alan (Feltham & Heston)


Ellman, Mrs Louise
Kelly, Ms Ruth


Ennis, Jeff
Kemp, Fraser


Etherington, Bill
Kennedy, Jane (Wavertree)


Ewing, Mrs Margaret
Khabra, Piara S


Fearn, Ronnie
Kidney, David


Fisher, Mark
Kilfoyle, Peter


Fitzsimons, Lorna
King, Andy (Rugby & Kenilworth)


Flint, Caroline
King, Ms Oona (Bethnal Green)


Flynn, Paul
Kumar, Dr Ashok


Follett, Barbara
Ladyman, Dr Stephen


Foster, Rt Hon Derek
Lawrence, Ms Jackie


Foster, Michael Jabez (Hastings)
Laxton, Bob


Foster, Michael J (Worcester)
Lepper, David


Foulkes, George
Leslie, Christopher


Fyfe, Maria
Levitt, Tom


Galloway, George
Lewis, Ivan (Bury S)


Gardiner, Barry
Lewis, Terry (Worsley)


Gibson, Dr Ian
Linton, Martin


Gilroy, Mrs Linda
Liddell, Mrs Helen


Godman, Dr Norman A
Lloyd, Tony (Manchester C)


Godsiff, Roger
Llwyd, Elfyn


Goggins, Paul
Lock, David


Golding, Mrs Llin
Love, Andrew


Gordon, Mrs Eileen
McAllion, John


Griffiths, Jane (Reading E)
McAvoy, Thomas


Griffiths, Nigel (Edinburgh S)
McCabe, Steve


Griffiths, Win (Bridgend)
McCafferty, Ms Chris


Grocott, Bruce
McDonagh, Siobhain


Grogan, John
McIsaac, Shona


Gunnell, John
McKenna, Mrs Rosemary


Hain, Peter
McLeish, Henry


Hall, Mike (Weaver Vale)
Maclennan, Rt Hon Robert


Hall, Patrick (Bedford)
McNamara, Kevin


Hamilton, Fabian (Leeds NE)
MacShane, Denis


Hanson, David
McWalter, Tony


Healey, John
McWilliam, John


Henderson, Ivan (Harwich)
Mallaber, Judy


Hepburn, Stephen
Mandelson, Rt Hon Peter


Heppell, John
Marek, Dr John


Hesford, Stephen
Marsden, Gordon (Blackpool S)


Hewitt, Ms Patricia
Marshall, David (Shettleston)


Hinchliffe, David
Marshall, Jim (Leicester S)


Hoey, Kate
Marshall-Andrews, Robert


Home Robertson, John
Martlew, Eric


Hood, Jimmy
Maxton, John


Hoon, Geoffrey
Meale, Alan


Howarth, George (Knowsley N)
Michie, Mrs Ray (Argyll & Bute)


Howells, Dr Kim
Miller, Andrew


Hoyle, Lindsay
Moffatt, Laura


Hughes, Ms Beverley (Stretford)
Moran, Ms Margaret


Hughes, Kevin (Doncaster N)
Morgan, Ms Julie (Cardiff N)


Humble, Mrs Joan
Morgan, Rhodri (Cardiff W)


Hurst, Alan
Morley, Elliot


Hutton, John
Morris, Ms Estelle (B'ham Yardley)


Iddon, Dr Brian
Mullin, Chris






Murphy, Denis (Wansbeck)
Snape, Peter


Naysmith, Dr Doug
Soley, Clive


Norris, Dan
Southworth, Ms Helen


O'Brien, Bill (Normanton)
Spellar, John


O'Brien, Mike (N Warks)
Starkey, Dr Phyllis


O'Hara, Eddie
Steinberg, Gerry


Olner, Bill
Stevenson, George


Palmer, Dr Nick
Stewart, David (Inverness E)


Perham, Ms Linda
Stewart, Ian (Eccles)


Pickthall, Colin
Stinchcombe, Paul


Pike, Peter L
Stoate, Dr Howard


Plaskitt, James
Stott, Roger


Pollard, Kerry
Strang, Rt Hon Dr Gavin


Pond, Chris
Straw, Rt Hon Jack


Pope, Greg
Stringer, Graham


Pound, Stephen
Stuart, Ms Gisela


Prentice, Gordon (Pendle)
Sutcliffe, Gerry


Primarolo, Dawn
Taylor, Rt Hon Mrs Ann


Prosser, Gwyn
(Dewsbury)


Purchase, Ken
Taylor, Ms Dari (Stockton S)


Quin, Ms Joyce
Thomas, Gareth (Clwyd W)


Quinn, Lawrie
Thomas, Gareth R (Harrow W)


Radice, Giles
Timms, Stephen


Rammell, Bill
Tipping, Paddy


Rapson, Syd
Touhig, Don


Reed, Andrew (Loughborough)
Truswell, Paul


Robinson, Geoffrey (Cov'try NW)
Turner, Dennis (Wolverh'ton SE)


Roche, Mrs Barbara
Twigg, Stephen (Enfield)


Rooney, Terry
Vaz, Keith


Ross, Ernie (Dundee W)
Ward, Ms Claire


Roy, Frank
Wareing, Robert N


Ruane, Chris
Watts, David


Ruddock, Ms Joan
Webb, Steve


Russell, Bob (Colchester)
White, Brian


Russell, Ms Christine (Chester)
Whitehead, Dr Alan


Ryan, Ms Joan
Wigley, Rt Hon Dafydd


Salter, Martin
Williams, Alan W (E Carmarthen)


Sarwar, Mohammad
Wills, Michael


Savidge, Malcolm
Wilson, Brian


Sawford, Phil
Winterton, Ms Rosie (Doncaster C)


Sedgemore, Brian
Woolas, Phil


Sheerman, Barry
Wray, James


Sheldon, Rt Hon Robert
Wright, Anthony D (Gt Yarmouth)


Shipley, Ms Debra
Wyatt, Derek


Short, Rt Hon Clare
Tellers for the Ayes:


Smith, Rt Hon Andrew (Oxford E)
Mr. Keith Hill and


Smith, Jacqui (Redditch)
Mrs. Anne McGuire.


NOES


Amess, David
Brazier, Julian


Ancram, Rt Hon Michael
Brooke, Rt Hon Peter


Arbuthnot, Rt Hon James
Browning, Mrs Angela


Atkinson, David (Bour'mth E)
Bruce, Ian (S Dorset)


Atkinson, Peter (Hexham)
Burns, Simon


Beggs, Roy
Butterfill, John


Bell, Martin (Tatton)
Chapman, Sir Sydney


Bercow, John
(Chipping Barnet)


Blunt, Crispin
Chope, Christopher


Body, Sir Richard
Clappison, James


Boswell, Tim
Clifton-Brown, Geoffrey


Bottomley, Peter (Worthing W)
Collins, Tim


Bottomley, Rt Hon Mrs Virginia
Colvin, Michael


Brady, Graham
Cormack, Sir Patrick





Cran, James
MacKay, Rt Hon Andrew


Davies, Quentin (Grantham)
Maclean, Rt Hon David


Davis, Rt Hon David (Haltemprice)
Maples, John


Day, Stephen
Mawhinney, Rt Hon Sir Brian


Dorrell, Rt Hon Stephen
May, Mrs Theresa


Duncan, Alan
Moss, Malcolm


Duncan Smith, Iain
Nicholls, Patrick


Evans, Nigel
Norman, Archie


Faber, David
Page, Richard


Fabricant, Michael
Paice, James


Flight, Howard
Paterson, Owen


Forth, Rt Hon Eric
Pickles, Eric


Fowler, Rt Hon Sir Norman
Randall, John


Fox, Dr Liam
Redwood, Rt Hon John


Gale, Roger
Robathan, Andrew


Garnier, Edward
Robertson, Laurence (Tewk'b'ry)


Gibb, Nick
Rowe, Andrew (Faversham)


Gill, Christopher
Ruffley, David


Gillan, Mrs Cheryl
St Aubyn, Nick


Gorman, Mrs Teresa
Sayeed, Jonathan


Green, Damian
Shephard, Rt Hon Mrs Gillian


Greenway, John
Shepherd, Richard


Grieve, Dominic
Smyth, Rev Martin (Belfast S)


Hague, Rt Hon William
Spring, Richard


Hamilton, Rt Hon Sir Archie
Stanley, Rt Hon Sir John


Hammond, Philip
Steen, Anthony


Hawkins, Nick
Streeter, Gary


Hayes, John
Swayne, Desmond


Heald, Oliver
Syms, Robert


Heathcoat-Amory, Rt Hon David
Tapsell, Sir Peter


Hogg, Rt Hon Douglas
Taylor, Rt Hon John D (Strangford)


Horam, John
Taylor, John M (Solihull)


Howarth, Gerald (Aldershot)
Taylor, Sir Teddy


Hunter, Andrew
Tredinnick, David


Jack, Rt Hon Michael
Trend, Michael


Jackson, Robert (Wantage)
Tyrie, Andrew


Key, Robert
Wardle, Charles


King, Rt Hon Tom (Bridgwater)
Waterson, Nigel


Kirkbride, Miss Julie
Wells, Bowen


Laing, Mrs Eleanor
Whitney, Sir Raymond


Lait, Mrs Jacqui
Whittingdale, John


Lansley, Andrew
Widdecombe, Rt Hon Miss Ann


Leigh, Edward
Wilkinson, John


Letwin, Oliver
Wilshire, David


Lewis, Dr Julian (New Forest E)
Winterton, Mrs Ann (Congleton)


Lidington, David
Woodward, Shaun


Lilley, Rt Hon Peter
Young, Rt Hon Sir George


Loughton, Tim



Luff, Peter
Tellers for the Noes:


Lyell, Rt Hon Sir Nicholas
Sir David Madel and


MacGregor, Rt Hon John
Mrs. Caroline Spelman.

Question accordingly agreed to.

It being Ten o'clock, further consideration stood adjourned.

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That, at this day's sitting, the European Parliamentary Elections Bill may be proceeded with, though opposed, until any hour.—[Mr. Mike Hall.]

Question agreed to.

Lords Reasons for insisting on certain of their amendments to which the Commons have disagreed, again considered.

Government amendment in lieu of the Lords amendments agreed to.

Orders of the Day — Income Tax

Mr. Nick Gibb: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Personal Equity Plan (Amendment) Regulations 1998 (S.I., 1998, No. 1869), dated 31st July 1998, a copy of which was laid before this House on 31st July, be annulled.

Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following motions:
That an humble Address be presented to Her Majesty, praying that the Individual Savings Account Regulations 1998 (S.I., 1998, No. 1870), dated 31st July 1998, a copy of which was laid before this House on 31st July, be annulled.
That an humble Address be presented to Her Majesty, praying that the Individual Savings Account (Insurance Companies) Regulations 1998 (S.I., 1998, No. 1871), dated 31st July 1998, a copy of which was laid before this House on 31st July, be annulled.

Mr. Gibb: We are glad to have an opportunity to debate the regulations on the Floor of the House. There is concern outside the House, as well as among the Opposition—[Interruption.]

Mr. Deputy Speaker: Order. Hon. Members must not continue extraneous conversations when an item of business is before the House.

Mr. Gibb: There is concern that the Government are over prone to using secondary legislation, particularly under the negative resolution procedure, on tax matters. I trust that our debate will prove to be a precedent for dealing with future important, tax-related, negative resolution statutory instruments on the Floor of the House.
The regulations are the latest, but undoubtedly not the last, stage in the catalogue of disasters that makes up what might be called the Government's savings policy. The Government themselves predict that their policy will lead to a fall in the savings ratio from 10.5 per cent. when they took office to 7.75 per cent. over the lifetime of a Parliament. Their savings policy has in fact already led to the ratio falling to 7.75 per cent. within 18 months of their coming to power. That is not so much a savings policy as a dis-savings scandal.
Labour's election manifesto said that the Government would
introduce a new individual savings account to extend the principle of TESSAs and PEPs to promote long-term savings.
True to his word, the Chancellor announced in his first Budget that the Government would
introduce from 1999 individual savings accounts, extending the principle of TESSAs and PEPs and continuing to offer favourable tax reliefs for savings."—[Official Report, 2 July 1997; Vol. 297, c. 306.]
The Government then inflicted enormous damage on people's confidence to save, first, by their imposition of a £5 billion a year tax on people's pension funds, and, secondly, in December 1997, by the Paymaster General's announcement that personal equity plans and tax-exempt special savings accounts would be abolished, and that individual savings accounts would be introduced. Abolition is hardly an extension. It is totally at odds with

the Labour manifesto, and flatly contradicts the words of the Chancellor in his first Budget. [HON. MEMBERS: "Where is he?"[Yes, where is he?
The new ISA, with its initial £50,000 lifetime limit, penalised the thrifty and the self-employed whose savings had been built up in lieu of a pension. With the announcement of those retrospective and draconian changes to the taxation of savings, people became understandably concerned that at some future date a Labour Government might do the same again. The damage inflicted by the announcement last December alone is incalculable—another major success of the Paymaster General. Perhaps that is why he is not here to defend the regulations which he published on 31 July 1998; he cannot be trusted to defend them himself.
The fanfare and hype that accompanied the Paymaster General's announcement last December, with the Prime Minister boasting that there would be 6 million extra savers—6 million people who would be able to save who could not then—were outdone only by the shock that Treasury Ministers received when faced with the public outcry.
There was outcry at the £50,000 limit on transferring from PEPS into ISAs. There was outcry at the retrospective taxation that was inherent in the new regime as it was introduced. There was outcry at the reduction in tax relief for savers from £10,800 a year to £5,000. There was outcry from the Financial Times, which said that the new system was "unfair", "unattractive" and "bureaucracy gone mad". There was outcry as well from the Consumers Association, which said that it could not see the point of ISAs. It said:
We see no real advantages but a lot of problems.
There was outrage from the Government's favourite economists, the National Institute of Economic and Social Research, which said that the replacement of PEPs and TESSAs by the ISA would reduce the pool of savings; how right it was with that forecast, with the savings ratio already down to 7.75 per cent. That outcry extended to the postbag of every hon. Member and to the 5,900 letters received by Ministers from members of the public.
I note that, yet again, the Economic Secretary is to defend the Government's case this evening. I cannot understand why the Government do not put up the gaffe-prone Chief Secretary, the Paymaster General or the Financial Secretary. What is up with the rest of the Treasury team that the Chancellor seems able to trust only the Economic Secretary? She is to be congratulated on that, or perhaps pitied for it.
Will the Economic Secretary answer the following points tonight? The Government's stated objective was to have millions of new savers depositing their spare cash at supermarket checkouts. Last March, the then Chief Secretary said that he wanted to extend the variety of outlets from which ISAs can be bought, including supermarkets.
In defending the regulations, will the Economic Secretary say how many supermarkets will be selling cash ISAs, or equity or insurance ISAs, at the checkout? Will she not admit that the ISA regulations before the House today contain complexity and costs which make it impossible for supermarkets to sell them at the till, which is why the supermarkets have said that they will not be doing so?


Does the Economic Secretary agree with Marks and Spencer that ISAs cannot be offered through the till, or does she agree with Stuart Sinclair, the chief executive of Tesco personal finance, who said:
Like many in the industry we believe that the Government missed an opportunity to put together a basic plan to appeal to the mass market. It is a bit of a non-event.
Or perhaps the Economic Secretary agrees with Roger McArthur, chief executive of Sainsbury's bank, who said:
We believe that it is important to recognise the commercial realities in which the potential ISA providers operate … the ISA will work properly only if it is cost-effective for providers as well as customers.
Many supermarkets such as Marks and Spencer may well provide ISAs through their normal mail order financial services operation, but none will operate ISAs through the checkout till, which was a central plank of the Government's objective of extending the number of savers by 6 million. Nothing in the regulations is likely to make that a realistic target.
The catalogue of incompetence continued. In March, the Government finally backed down on their absurd £50,000 lifetime limit and the Chancellor announced details of his proposed scheme. He said that
the individual savings account will … offer complete freedom to move cash in and out".
That is not true, as the details published by the Treasury make clear. Cash can be moved out, but investors can reinvest it only if they have not already put in £1,000 in that tax year, regardless of whether the £1,000 remains.
The Chancellor also said that
the individual savings account will receive a 10-year guarantee that savings up to £5,000 a year can be invested with all existing… reliefs."—[Official Report, 17 March 1998; Vol. 308, c. 1102.]
That is not true either, because after five years the tax credit rebate disappears—a slight case of ISA mis-selling by the Chancellor. Many people suspect that the 10-year guarantee introduces a £50,000 lifetime limit by the back door.
ISAs were not really intended to extend savings, but are yet another method by which the Government hope to raise tax revenue. In March, the Chief Secretary admitted that. He said that the problem was that the cost in terms of lost revenue of tax relief for TESSAs and PEPs was £1.5 billion a year, rising on current trends to £2 billion by 2007. That seems a small price to pay when some 3 million people have PEPs and 4.5 million have TESSAs, and those numbers were increasing.
TESSAs and PEPs were very successful savings incentives. As Andrew Dilnot of the Institute for Fiscal Studies said, almost all the objectives of the ISA
could equally have been achieved by abolishing the five year lock-in period on TESSAs and leaving things as they were.
The Institute of Chartered Accountants—[Interruption], which I am always keen to quote, said:
It is our conclusion that it would be more straightforward to amend the existing PEP and TESSA savings schemes rather than introduce a wholly new scheme, particularly as the … ISA does not appear to offer improved savings incentives, and in fact may well discourage many individuals from saving.
The tax incentives set out in regulation 22 of the ISA regulations are much less. The shares ISA will have a tax credit of only 10 per cent. and only until 2004, whereas under the previous Conservative Government PEPs had the full 20 per cent. tax credit. Will the Economic

Secretary tell the House what the tax advantages are for a basic rate taxpayer who holds equities through an ISA? Given that such an individual is unlikely to use his annual capital gains limit, and that ISA charges, even with the cost access terms standards, are likely to exceed the tax credit, what are the advantages? If the hon. Lady insists that there are advantages, will she tell the House by what date she expects the Prime Minister's forecast of 6 million more savers to have been met?
Despite all the changes to ISAs since their original launch last December, the savings industry still believes that they are too complex. The regulations add to that complexity. The PEP and ISA Management Association points out that a significant number of PEP holders broke the rules, usually by subscribing to two managers in one year, and had their PEPs declared void; and that, as ISAs are even more complicated, more mistakes will be made.
There are three types of ISA: cash, shares and insurance. They have different limits, but a higher limit in the year 1999–2000. There are maxi and mini ISAs. Mini ISAs are designed so that investors can chose different managers, but maxi ISAs can have only one manager. One cannot have both a maxi and a mini ISA in one tax year. On top of all that, there are the continuing rules for PEPs and transitional rules for moving from a TESSA to a cash ISA, at regulation 5 of the Individual Savings Account Regulations 1998. Today, The Sun exposes an enormous loophole in the regulations—an ISA and a TESSA can be held in the same tax year.
There is concern in the industry that the regulations make it difficult for any one organisation to offer an ISA with a full range of cash, life assurance and equity components, because the regulations allow ISA providers to link up with only one other specialist organisation. There is also concern about the absence of statutory compensation for depositors if an ISA manager who is not himself a deposit taker defaults on cash held before passing on the cash to the deposit taker. Why is there nothing in the regulations to deal with that?
Those problems are compounded for the industry by continued Government delays in publishing regulations and details, which make it nigh on impossible to develop the necessary information technology systems by April 1999, when the regulations come into force—particularly given that there are millennium bug problems to deal with as well. We believe that the Government should delay the introduction of the ISA for at least a year to give the industry the chance to implement new IT systems correctly. They should allow new PEPs and TESSAs to continue during that period.
In its compliance cost assessment of ISAs, the Inland Revenue calculates that the cost of running a cash ISA will be up to £4 per annum per account higher than the annual running cost of a TESSA, and that the cost of running a shares ISA will be up to £2 per annum per account higher than the cost of running a PEP. That is in addition to the £250 million set-up cost which the Inland Revenue estimates for the new ISA.
Those are significant extra costs, and I cannot understand how a more complex and more expensive savings regime with fewer tax incentives will encourage lower-income individuals without savings to start to save. Perhaps the Economic Secretary would elucidate.


No wonder that Standard Life, the largest mutual life assurer in Europe, is refusing to offer the insurance ISA. Peter Robinson, the marketing manager at Standard Life, said:
We did some focus groups with customers.
The Economic Secretary and her party know all about focus groups.
They could see the point of the cash ISA and the Stocks and Shares ISA but not the insurance ISA.
If they are struggling with the point of it, we were going to be struggling with selling it.
Gordon Maw, of Virgin Direct, said:
We wouldn't touch it with a barge pole.
Other companies simply think that it is not commercially viable. Nothing in the Individual Savings Account (Insurance Companies) Regulations 1998 makes it an appealing stand-alone product. Perhaps the Economic Secretary can tell the House how she expects the insurance ISA to succeed.
There are a huge number of concerns about cost access terms marks in the savings industry. They appear to give a halo to the ISA provider—almost a Government guarantee, even though the standard concerns itself only with administration charges and accessibility. The Personal Investment Authority, for instance, has said:
The development of the CAT standards amounts in effect to product endorsement. This could lead to the danger that investors could be steered away from other products … more suitable for their needs, but which did not meet the CAT requirements.
The level of charges will also act as an anti-competitive barrier to entry. Only those equity ISA providers with large portfolios will be able to charge only 1 per cent. per annum, thus keeping new providers out of the market altogether.
Can the Economic Secretary also clarify a point on which the savings industry is finding it difficult to get an answer? Will she confirm that, for the purposes of the CAT mark, the 1 per cent. charge permitted for shares ISAs does not include costs incurred by the fund in relation to stamp duty on share transactions in the underlying investments?
Although Conservative Members welcome some of the changes to the regulations that have been made since they were published in draft in May, especially those relating to the transitional rules and the extended time limits for reporting requirements, there are still many concerns in the industry over issues such as the determination by the Inland Revenue that protected funds and short-term gilts should be excluded from ISAs because of concern that they will become cash substitutes.
Some in the industry think that the restriction in regulation 7(6) is unnecessary and counterproductive in that these are the very products that best fit the Government's objective of encouraging people to save for the long term, and to obtain a return that is better than that from a deposit account.
There is also concern about the constitutional propriety of CAT marks that have been issued in a Treasury press release, without any legislation or statutory instrument—under either the negative or the affirmative procedure—coming before the House, and which the Financial Services Authority considers binding as law.
The introduction of ISAs and the abolition of PEPs and TESSAs has been a catastrophic mistake by the Government. It has been a catalogue of incompetence by a Minister who is not even here to defend his policy, but has left it to the Economic Secretary to pick up the pieces. This policy is costly to the savings industry, has damaged savings and has added to the Government's macro-economic blunders. The Government's savings policy is a shambles, and I urge the House to oppose these regulations.

Mrs. Angela Browning: On a point of order, Mr. Deputy Speaker. Is it in order that, when my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) referred to the Institute of Chartered Accountants, the hon. Member for Croydon, Central (Mr. Davies) said, from a sedentary position, although his remarks were audible to us, "How much are they paying you?"

Mr. Deputy Speaker: That is not a point of order for the Chair. The matter may come up in debate, but I did not hear that remark.

Mr. Christopher Leslie: On a point of order, Mr. Deputy Speaker. Is it in order for a signatory to the motion—

Mr. Deputy Speaker: Order. I can already advise the hon. Member that that is pursuant to a point of order that I have ruled is not a point of order.

The Economic Secretary to the Treasury (Ms Patricia Hewitt): I thank the Opposition and the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) for giving us another opportunity to debate individual savings accounts. We have done precisely what the Opposition did when they introduced PEPs by way of regulations rather than through primary legislation. However, what we have done that the Opposition did not do with PEPs when they were in government is to consult widely about the detail of ISAs. The House has already debated ISAs on a number of occasions and at some length.
The consideration that the House has given to ISAs and the extensive consultation outside the House have helped to lay the ground to make the introduction of ISAs a success. ISAs are, indeed, going to be a great success, and that is now widely accepted within the savings industry.
A recent circular sent out by a stockbroking firm says:
We were pleased to see so many readers at our recent presentation. Some were surprised by our comments on the new Individual Savings Account. Contrary to what newspapers may say, readers should be in no doubt. ISAs should be big, very big. After April, they will be the prime savings product, heavily promoted, with much greater investment scope than PEPs. And Catmarking should be beneficial. It will encourage the development of direct marketing of low cost products.

Mr. Tim Loughton: Who said that?

Ms Hewitt: Hoare Govett.


Annulling the tax regulations now, as this motion seeks to do, would spread uncertainty and alarm throughout the savings industry. That is what the Opposition are seeking to do, and such a step would be deeply unpopular. Firms are currently busy designing their ISA products and their advertising campaigns.

Mr. Loughton: Of the more than 7 million people who own PEPs and TESSAs, how many does that financial, foreign-owned firm have on its books?

Ms Hewitt: I am astonished to hear a Conservative Member apparently objecting to a stockbroker firm operating in this country because it is foreign owned. I shall happily quote the literature of Virgin Direct and Marks and Spencer, which enthusiastically welcome ISAs.
Let me return to my point about the Opposition motion. Firms are busy designing their ISA products and their advertising campaigns. The time and effort that they are putting into ISAs would be wasted if the regulations were annulled, and that would certainly not be well received—especially when it was discovered that the motions were technically flawed, as they are.
Let me give two examples. First, the motions seek annulment of only three of the four ISA-related sets of regulations that were laid before Parliament on 31 July. Secondly, they would leave cash savers high and dry. I think I am right in saying that the hon. Member for Bognor Regis and Littlehampton served on the Finance Bill Committee, on which I understand he was known to his colleagues as "Mr. Bean from Bognor". The Act that the Bill became prevents tax-exempt special savings accounts from being opened after April 1999.
I see no merit in the motions, but what I can do is commend the ISA initiative. We designed ISAs to encourage people to save in a fair and efficient way, and to raise the level of long-term savings. Half the population have less than £200 in savings, and half those people have no savings at all. Many people—I know this from my constituency, Leicester, West—have no bank accounts, let alone any form of savings. This Government are determined to help people who are not saving to get started, and to help people who are already saving to save more.
Offering tax incentives is an important way of encouraging people to save, but we need to balance that against the cost to the public purse. As a new Government, we set about looking at how we could rebalance the cost of the PEP and TESSA schemes that we had inherited. We wanted to encourage more people to save, and at the same time to distribute the available tax relief more fairly.
It may be helpful if I now dispel one of the common myths about ISAs. They were not introduced to reduce the cost of tax relief. The cost of ISAs to the public purse is broadly what PEPs and TESSAs would have cost if they had continued unchanged. That cost is forecast to grow to about £2 billion in five years' time. ISAs are very much about distributing tax relief more fairly among more people; they are not about reducing the overall tax relief on savings.

Mr. Steve Webb: Does the Minister accept that PEPs and TESSAs probably did little to

increase aggregate savings, simply encouraging people to put whatever they were already saving into more tax-privileged facilities? What does she think ISAs will do to change that?

Ms Hewitt: The hon. Gentleman makes an important point. As I shall explain in a moment, in the design of ISAs—and the design of CAT standards—we have overcome some of the most important barriers that are mentioned when those who would like to save, and know that they should be saving, are asked why they are not doing so.
As well as ensuring a wider distribution of tax relief, we were determined to widen the range of savings products in comparison with what had formerly been available. A wider range, including life insurance, will attract new savers and encourage small savers to save more. It was clear to us that PEPs and TESSAs could not be modified in a practical way to meet our objectives. We therefore decided that a completely new approach was needed, and the ISA was developed.
We appreciated that we would get a better product if we tapped into the experience and expertise of savers and the savings industry. We therefore engaged in open, wide-ranging and constructive consultations at every stage in the development of the ISA. Consultation papers have been issued on the structure of the scheme, the detailed tax regulations, CAT standards and product regulation.
It has been widely recognised that the Government listened during the consultation, and that we have acted on what we heard. When I spoke at a recent conference of PEP and ISA managers, several speakers praised all involved for the constructive way in which they had listened and responded. Praise for the Inland Revenue, the Treasury and the Financial Services Authority all at the same time is not, in my experience, common, but I heard it, and on several occasions.
The results of that approach are often presented by the Opposition as some sort of climbdown or U-turn. That completely misunderstands what consultation is about. Consultation is a much better approach than the excessive secrecy under which such changes were introduced in the past. The previous Government introduced PEPs in 1987 without such consultation and had to relaunch them in a substantially modified form just two years later.
We are committed to open, genuine and honest consultations and we are grateful to all those who contributed to the ISA consultation. Their input has been highly valued and highly valuable. We have modified our approach, including the detail of the regulations, as a result of their comments. We have a better product as a result.
I turn to the details of the ISA. It offers, of course, tax-free savings, with a broad and flexible range of schemes. As the hon. Member for Bognor Regis and Littlehampton said, it has three different components: cash, a life insurance policy or stocks and shares. It offers the flexibility of one manager managing all three components within a so-called "maxi" account, or the different components can be managed by up to three different managers with so-called "mini" accounts. That flexibility is one of the features that was introduced into the scheme as a result of the consultation.


Research that we have commissioned in the Treasury, confirming results of research by other people, shows that 90 per cent. of people want easy access to savings and that two thirds of them are worried about the small print. ISAs address both those points.

Mr. Loughton: The hon. Lady again mentions research done within the Treasury. How does she gel that with the statement by Paula Diggle, head of financial services at the Treasury, who said at a PEP conference in June:
We do not have a market research budget—I wish we did"?

Ms Hewitt: I am delighted to say that the civil servant to whom the hon. Gentleman refers assisted me in the research that I commissioned.
ISAs and CATs are designed to address those barriers to savings that our research and that of many other people have established are a problem. At the moment, someone investing in a TESSA has to lock their money away for up to five years to qualify for tax relief—one of the biggest barriers to saving by people who would like to save, but are terrified that their money will not be available in an emergency when they need it. With the ISA, there is no minimum lock-in period and, indeed, no minimum subscription. That is why saving with a cash ISA is so simple.

Mr. Gibb: If the hon. Lady has done so much research, perhaps she will tell the House by which date the Prime Minister's forecast of 6 million new savers will be met.

Ms Hewitt: There is no target for the number of new savers or new accounts, but we are confident, because of the way in which the design of ISA and CAT standards responds to the concerns of those who are not currently saving, or those who are only saving very little, that, over some years, ISAs will build up extremely successfully.
As I have said, half this country's population have savings of less than £200. There is a large market out there, which we need to reach. I hope that Opposition Members will support us in that aim.

Mr. Loughton: Will the hon. Lady give way?

Ms Hewitt: I have already given way twice to the hon. Gentleman. I am sure that he will forgive me if I try to make some progress.
The ISA scheme is guaranteed to run for 10 years. We will review the future of the scheme at the seven-year point, but it means that anyone contributing to an ISA will have a level of certainty that has never been available in the past. Of course, we will keep the scheme under review and we will make changes where necessary to help ISAs run more smoothly. However, the scheme itself is secure for 10 years. Existing PEP and TESSA holders will not be disadvantaged in any way. PEPs can run on, though without additional contributions, and TESSA holders can continue to contribute to existing schemes within the current limits. When the TESSA matures, the capital can be rolled over into an ISA.
I shall deal now with the CAT standards, a feature of the ISA scheme which we believe will help to attract new savers and new savings. I have referred to the research

which shows that people are worried about the small print on existing savings products. It puts many people off saving. They fear that they may be ripped off by people who know considerably more than they do about finance. It is not surprising that people have those fears when, as we all know, too many people have been ripped off in the past. The pensions mis-selling scandal, which we are now having to clear up, shows that only too clearly.
The Government have looked at ways to help investors. For some years now there has been a regime of disclosure. It has been beneficial, but insufficient to increase competition when inexperienced consumers are faced with expert providers. So we opted for a system of voluntary benchmarks that will empower consumers and strengthen competition in the financial services marketplace.
We have introduced CAT standards. The term is designed to avoid any confusion and describes quite succinctly the purpose of the benchmarks. CAT standards will set levels for costs, for access and for terms of ISA products. If an ISA account meets the CAT standard, people will know that it offers fair charges, easy access and decent terms.
Under the CAT standard, charges will be fair and transparent and will not exceed the set upper limits. For example, on a standard stocks and shares ISA there will be an annual charge that cannot exceed 1 per cent. and the saver will not face the hidden charges which, all too often, exist at present in addition to the annual charge.
The hon. Member for Bognor Regis and Littlehampton asked about precisely what is covered in the annual charge. There is no confusion on that point. Let me make it clear that, whenever they have been asked, Treasury officials have spelt that out to applicants who want to become managers for ISAs, and to others seeking guidance. The annual charge includes dilution levies and the stamp duty on the individual investor's unit, but it does not cover the cost of transactions in the underlying fund. The single price that will be required for a fund to meet the CAT standard is struck after the costs of transactions, stamp duties and dealing costs have been covered. In other words, the price automatically takes account of them and they are not logged against the annual management charge.

Mr. John Butterfill: Is it not possible that people may be misled into thinking that something that has a CAT standard is entirely appropriate for their circumstances, whereas it may be inappropriate for that investor? Is there not a danger that the introduction of CAT standards will lead to even more widespread mis-selling?

Ms Hewitt: That is an important point and it is something that we thought about carefully before deciding on the nature and design of the CAT standard for the equity ISA.
It is clear from research carried out by the Financial Services Authority and on its behalf, that investors faced with the sort of basic information that will be required for a CAT standard ISA understand very well that it is not a Government guarantee. The CAT standard spells out that there will be an investment risk. We believe—we have good reason to believe it on the basis of that research—that the CAT standard will strengthen consumers in


inquiring about the difference between a CAT standard equity ISA and a non-CAT standard product. Therefore, providers offering non-CAT standard products, either instead of or alongside CAT standard equity ISAs, will be able and even encouraged to explain to potential investors why their product, although its annual charge may perhaps be higher than that for a CAT standard ISA, may none the less be more appropriate for a particular investor. That is precisely what we mean by empowering consumers, making the market more transparent and enhancing competition.

Mr. Douglas Hogg: How does the hon. Lady respond to the suggestion that the CAT standard will prevent smaller and more recently established providers from coming into the market?

Ms Hewitt: I do not accept that there is any evidence for that proposition. It is obvious that the CAT standards that we have set—although they are challenging, and deliberately so, to the market—are sustainable. New providers are already coming into the market. On cash ISAs, National Savings—which was debarred from the market by the previous Government—has announced its intention to offer a CAT standard ISA.
On access, the important point about a CAT standard ISA is that access will be easy and that people can have confidence that they will be able to get their money out if they need it. With an insurance ISA, for example, people will be able to get at least their premiums back after three years or more. There will also be no discovering—as currently happens all too often—that one's money has vanished if one has to cash in a policy early.
The third element of the CAT standards is that terms will be fair. Nothing will be hidden, and there will be no nasty surprises in the small print. There will be no restructuring of accounts once customers have signed up or interest rates cut after deposits are made.
There are those in the savings industry who have been concerned about the CAT standards and claim that the limit set for charges is too challenging. We shall certainly be monitoring the impact of the CAT standards once the system goes live, and we shall make changes if they are needed.
I should stress that the CAT standards are voluntary. Firms will offer CAT standard products if they want to, and some have already said publicly that they intend to do so. Other firms have said that they will offer products that do not meet the CAT standard but that—as the hon. Member for Bournemouth, West (Mr. Butterfill) suggested—may be more appropriate for certain consumers, perhaps covering riskier investments, and therefore requiring more management and higher fees but offering the potential for higher returns. That is precisely the type of choice that we want in a competitive marketplace for savings.
If firms decide not to offer a CAT standard ISA, their marketing will have to show that the ISA does not meet the CAT standards.
The other main criticism of CAT standards has been that they will be seen as a form of guarantee. As I said, CAT standards give no guarantee—because nobody can—about the performance of an investment. CAT standards themselves require providers to make the investment risk

clear in marketing information on the product, just as the Government's publicity will make it clear that a CAT standard is not a Government guarantee.
CAT standards will address features of savings that we know worry the small saver or put off entirely the potential saver. They will help to remove the worry of getting ripped off, help savers get fair and decent treatment and give savers greater confidence.
There is now less than six months to go before the launch of ISAs, and a great deal of work has been done by ISA managers to prepare products for launch in April. The Government still have their part to play. The Inland Revenue will shortly be tendering for the publicity campaign that will increase awareness of ISAs and ensure that they get off to a good start next April. As part of that awareness campaign, a leaflet will be produced later in the year to provide details of the ISA and how it can be used.
The savings industry wanted early notice of the rules for ISAs, so that it could move ahead with its planning. The Inland Revenue's tax regulations give them that notice, and the work that is now being done by the industry is based on the detailed tax regulations that were laid before Parliament on 31 July 1998. The industry wants to be left to get on with its work. It wants to be able to develop its products, so that when April comes, ISAs will be widely available in the market. We can see the early signs of its work in the information that is already coming through our letter boxes and in the pre-ISA accounts being offered on the high street.
What the industry and the consumer do not need is indecision. The Opposition's prayers do nothing constructive. If accepted, they would introduce unnecessary worry and concern and would result in the waste of a great deal of time and money already invested by savings firms. We should be thinking about our constituents—how we can help them consider their existing savings plans or how they might start to save.

Sir Sydney Chapman: I have been listening to the hon. Lady with great interest. One thing that unites all parts of the House is that we should encourage our constituents to save. Given what the hon. Lady has said about promoting ISAs, not in opposition to PEPs and TESSAs but as a complement to them, how much does she think her proposals will increase the amount that our constituents save in net terms next year?

Ms Hewitt: As I said, half the people in this country have savings of less than £200 and some have no savings at all. One of the biggest barriers to saving for people who could afford to save a bit and who know that they ought to be saving is the danger that they will not be able to get their money back when they want it. The cash ISA, especially the CAT standard cash ISA, removes that and other barriers that my constituents have outlined to me. We are confident that new savers, as well as existing small savers, will take advantage of the new ISAs next April and in the months and years that follow.
We now need to let the savings industry get on with the work that it has in hand. With the Government Departments involved and with, I hope, the support of the Opposition, the savings industry will then be able to make ISAs a success for all our constituents. We should reject the prayers, and I am sure that the House will support me in doing just that.

Mr. Tim Loughton: I am grateful for having caught your eye, Mr. Deputy Speaker. I must declare an interest, as set out in the Register of Members' Interests, in that I am guilty of professionally managing personal equity plans since their inception in 1987 and have owned some for many years.
The independents savings account debacle is a textbook example—

Mr. Christopher Leslie: On a point of order, Mr. Deputy Speaker. My memory was jogged by talk of Members' interests. The right hon. Member for Horsham (Mr. Maude), the shadow Chancellor, is a director of Gartmore Shared Equity Trust plc, which manages PEPs and from which the right hon. Gentleman receives £8,500 a year. Is it in order for him to fail to draw attention to that fact when he is a signatory to one of the motions that deals with PEPs?

Mr. Deputy Speaker (Mr. Michael J. Martin): That is not a matter for the Chair. Any complaint of that nature should be made to Sir Gordon Downey.

Mr. Loughton: Labour Members become very anxious when a Conservative Member who knows something about the subject being debated rises to speak. When we debate financial affairs, it is only a matter of nanoseconds before a Labour Back Bencher comes up with that well-worn phrase "pensions mis-selling", whatever the subject we are debating, because that is the sum total of Labour's knowledge of the financial industry in general.
The episode started on 2 December last year with the publication of the ill-fated Green Paper by the Paymaster General, who I regret is not here to see through the fruits of his work, which has not yet ended. The regulations that we are now debating eventually crept out during the recess at the beginning of October after numerous delays and, whatever the Economic Secretary says, after numerous U-turns and double U-turns. The main document was entitled "Making Savings Easy", but it actually made saving rather more difficult and met with widespread outcry or outrage from the professional investment community. It was all in aid of a vastly inferior product to the highly successful PEPs and TESSAs, as my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) said, because of the Chancellor's need to produce a new-labelled product for savings with his own name on it.
The whole debacle has not been helped by the last-minute regulations, directive and instructions that have sneaked out. There are now just 146 days to go until ISAs supposedly go live. It has been estimated that it will cost the financial community more than £100 million just to set up the computer systems. Inevitably, those costs will be passed on to the users and consumers of ISAs. A survey has found that probably at least one third of potential ISA fund managers will not be ready to go live with ISAs on 6 April next year and that is almost exclusively down to the dilly-dallying, delay and obfuscation of Ministers and Treasury officials.
However the Economic Secretary may dress it up, Mr. Deputy Speaker, ISAs will cost you, me and all our constituents more. The Treasury has estimated that ISAs will be between 30 and 40 per cent. more expensive to run

than PEPs and TESSAs. In August, the Inland Revenue estimated that the cost of setting up and running ISAs for the first year would be about £250 million—a sum that has increased because of the Government's delay and dilly-dallying. ISA fund managers will also have the added computer costs of dealing with the year 2000, the single pricing that will come in with open-ended investment companies—OlECs—and a whole raft of other new financial measures.
As for the Economic Secretary saying that it has been absolutely clear what the charges would include, that only crept out about a week ago. Until the end of October, the national financial press was still raising questions about that matter. This evening provides the first record of a Minister making it clear—if, indeed, it is clear—what the charges will include, only 146 days before ISAs start.
Standard Life, one of the largest mutual societies in Europe, has condemned ISAs as being generally seen as substandard replacements for PEPs and TESSAs. Whatever gloss the Economic Secretary puts on it, ISAs are inferior to PEPs and TESSAs because the amount that people will be able to invest in them after the first year will be £5,000 per annum. Under the PEPs and TESSAs regime, the annual amount was £10,800 per annum—more than double. It is an inferior product that will encourage less savings into the tax-advantageous environment. ISAs will also be inferior because the tax credit goes down to 10 per cent. For the average taxpayer, that means a saving on the income by being in ISAs of just £15 a year at most before charges. In reality, charges will rub out the whole tax saving that they may have gained.

Mr. Butterfill: Does my hon. Friend agree that the view of Standard Life is all the more pertinent since the Government recently invited the chief executive of Standard Life to be a deputy governor of the Bank of England?

Mr. Loughton: My hon. Friend makes a fair point, but it is yet another inconsistency in the way in which the Government work.
When the Paymaster General deigned to come to the House after announcing the whole ISA scheme outside, he reminded us that simplicity, flexibility, accessibility and fairness were the hallmarks of that great new product, but as time went on certain of those terms disappeared.
Let me dwell on the accessibility argument and the new providers, or rather their absence. I am sorry that the Economic Secretary declined the challenge made by my hon. Friend the Member for Bognor Regis and Littlehampton to name some of the new providers. As he succinctly put it, the supermarkets have given it a serious thumbs down. Tesco, Sainsbury's and Marks and Spencer are unlikely to be offering the products at the checkout, as was specifically encouraged in the preface to the Green Paper on 2 December.
Some of the larger providers in the financial community have also given the plan the thumbs down. Pearl Assurance is concerned that the charges will be set so low that it will not be able to produce a CAT standard ISA. Standard Life has decided not to sell mortgages backed by ISAs, claiming that they offer no advantages over traditional endowment policies. It has also decided not to sell the life assurance element of the ISA. Its chief


executive said that the company did not expect that the tax treatment of ISAs would make it any more attractive to invest for mortgage repayment through them than through an endowment. It has decided to withdraw its PEP mortgage product from sale.
That has implications for those who have regular PEP savings plans–1.5 million people choose to save in PEPs in that way—particularly those who use them to fund their mortgages. If new ISA providers do not appear and if their existing PEP mortgage provider decides not to provide ISAs, how will they save every month against their mortgages using a tax-advantageous scheme? It has been claimed that the drop-out rate will be as high as 20 per cent. for those whose firms do not roll over into ISA schemes. That is a damaging possibility for those who fund their mortgages in that way.
At the press conference that launched ISAs, the Paymaster General said that marketing was key. We seemed to be promised that a duff product would yet again be dressed up in Labour spin doctors' best clothes and flogged to an unwary public. Yet the princely sum of £1.2 million has been set aside as the promotion budget for ISAs. That includes nothing for television or major media coverage and compares with the £25 million that was set aside to promote Hector the friendly tax man. It will need a lot more than hope and £1.2 million of flimsy marketing budgets to explain the complexities of the ISA scheme to savers, particularly the ubiquitous 6 million virgin savers, if I may call them that. Whatever the Economic Secretary may say and however she may try to wriggle out of the target of 6 million savers that was bashed at us time and again, the Prime Minister said on 3 December:
The announcement … is good news for middle Britain. There will be 6 million extra savers as a result—6 million who will be able to save but at present cannot."—[Official Report, 3 December 1997; Vol. 302, c. 349.]
That sounds to me like a target. I should like to know when, on the long road between 2 December last year and tonight, that ceased to be a target. It sounds like one of those early pledges that are not, in fact, early.

Mr. Nick St. Aubyn: Does my hon. Friend agree that, whereas last week we were treated to Peter Pan economics, this is a case of Tinkerbell targeting?

Mr. Loughton: That is a soundbite worthy of Labour's best spin doctors, if I may compliment my hon. Friend.
The 6 million virgin investors are the great mystery of our times. Where is the great queue of people clamouring outside the doors of the Treasury to hurl their money into the new ISA schemes? Who are these people? In the final list, the Economic Secretary may even be able to name them, because there will be very few. The mystery of the 6 million is a mystery greater than the Loch Ness monster, large cats in Norfolk and anything that could be thrown at us from "The X files".
All the inferior considerations of the ISA scheme that I have listed might just imaginably be worth while if the Government could prove that it really would encourage a greater saving mentality among the supposed 6 million people. There is no evidence whatever—there has been no evidence since 3 December—that the scheme will encourage a single virgin investor to become a saver. I challenge the Government again: who are the 6 million people?
I was not comforted by the Economic Secretary's disclosure that Paula Diggle helped her in the research. It has been plain all along that, before the Treasury produced the Green Paper, it had done no research into the savings mentality and regime. It is now patently clear that, since then, it has still conducted no such proper research. The finance industry has been left to do its own research.
A MORI poll, commissioned by the Midland bank and the Financial Mail on Sunday in the summer, found the following. Only 47 per cent. of the public are aware that PEPs and TESSAs are to be replaced by ISAs in April—quite a challenge for the £1.25 million promotion budget—but 51 per cent. of them are unlikely to take out an ISA. Only 3 per cent. of adults earning less than £11,500 per annum said that they were very likely to invest in an ISA, and 32 per cent. said that PEPs offered greater tax efficiency—against only 12 per cent. who said that ISAs did.
A similar poll, carried out at the same time by the Association of Unit Trusts and Investment Funds, found that only 18 per cent. of PEP holders plan to invest a similar amount or more in ISAs when they are introduced next year. That is the research that the Treasury failed to do when it embarked on this lamentable scheme. If such research is correct, the start for ISAs next year and the subsequent few years will not be attractive.
I shall touch on the many other complications in the ISA scheme. The Inland Revenue will have one hell of a job monitoring maxi and mini ISAs, all the different providers that one ISA investor can employ, and the scale of withdrawals and subsequent reinvestment. The news that there is a substantial logjam in many Inland Revenue offices, such that sacks of mail from as early as April lay unopened and tagged with the date, and are being opened in chronological order only now; the fact that an estimated 1 million people were last year sent incorrect tax bills during the first year of self-assessment; and the future challenge of corporate self-assessment later this year do not instil confidence in me that the Inland Revenue will be able to cope with the complexities of the scheme.
I will not touch on CAT standards—my hon. Friend the Member for Bognor Regis and Littlehampton covered that issue satisfactorily. Suffice it to say that, right from the start, it was clear that the cat had used up its nine lives before it was born. The ultimate absurdity of CAT standards, as the Economic Secretary almost admitted, is the fact that savings and investment accounts backed by the Government at the moment fail signally to meet such standards—even though the Government envisage national savings playing an important role in the development of ISAs.
I shall skim through several other minor details. Cheap capital protective funds have been excluded from ISAs, yet futures and options funds can reduce the risk for cautious new investors. Until the Financial Services Authority assumes full control of ISAs—if such a Bill proves to be part of the Queen's Speech—a dissatisfied ISA holder may have to deal with three separate regulators. The Government could have amended PEPs and TESSAs—an already successful savings culture. If it ain't bust, don't fix it.
How many providers have registered an interest in providing ISAs from 6 April next year, and is the financial press right to say that, far from the target of 500 to


600 which appeared in the Economic Secretary's answer to one of my parliamentary questions, little more than a dozen have so far signalled their intent?
The ISA programme represents a major lost opportunity to update and streamline the existing PEPs and TESSAs and to encourage savings. The system could perhaps have been linked with benefits system, to provide a kickstart incentive for the less well off to save.
Instead, as my hon. Friend the Member for Bognor Regis and Littlehampton said, the initiative is harming the existing savings mentality and driving down the savings ratio. It is a sorry tale, and I back the calls by my Front-Bench colleague for a 12-month moratorium during which PEPs and TESSAs continue with their full allowances until the Government have proved that a substantial number of new investors will be attracted in by the ISA scheme. If they fail to prove that, as I am sure they will, we should stay with what we already have, because it works rather well.

Mr. Nick St. Aubyn: I follow on from what my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) has said by observing how clear it is that the Government's decision to change the savings schemes was simply an attempt to rebrand a Conservative success story. Only someone who lived in wonderland would believe that changing the name from "PEP" to "ISA" would increase the number of people who want to subscribe to savings schemes.
The almost 8 million people who had either a PEP or a TESSA before the Labour party came to power had saved a total of more than £60 billion between them—a sum greater than the pension savings in the entire German economy. Such an achievement in the 10 years since PEPs were launched by the Conservative Chancellor of the day is a measure of the success of the previous Government in targeting and promoting genuine long-term savings.
The Minister complained that under the Conservative scheme there was a five-year lock-in. However, as everyone knows, if one invests in the share market there may be ups and downs in the short term, and only if one is prepared to invest in the longer term do the benefits show through.

Ms Hewitt: Will the hon. Gentleman correct that statement? TESSAs, which had a lock-in period, were cash accounts.

Mr. St. Aubyn: That is correct, but PEPs were not.

Ms Hewitt: But as the hon. Gentleman, I am sure, was about to say, there was no lock-in period for PEPs.

Mr. St. Aubyn: There was a penalty for withdrawing from PEPs in the early years, as the hon. Lady well knows. The point is that long-term incentives coupled with a tax incentive are part of the winning formula that the previous Government developed.
That follows on from the principle of pension savings. Those have a much longer lock-in period, and let us consider how successful they have been. Pension savings, with the tax incentives that the Conservative Government promoted, have given us in this country the best savings rate for our retirement of almost any country in the world. Our pension savings are greater, cumulatively, than those of the rest of the European Union put together.
Long-term savings with long-term tax breaks and a long-term lock-in are a successful formula for savings in our country. Does the Economic Secretary believe that the level of national savings matters? There are left-wing economists who maintain that in the new global economy, the level of savings in one individual country is not especially significant.
Perhaps the hon. Lady has that sophisticated point of view, and does not worry about the fact that the savings level in this country has declined so disastrously since her party came to power. Does the Economic Secretary care about that, and what, in practical terms, will she do? The evidence from my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) is that ISAs are not part of the solution to the fall in the savings rate that has occurred since Labour came to power.

Mr. Nick Hawkins: Does my hon. Friend agree that part of the disaster of the Government's plans has been that, when they were announced, they included the particularly unattractive ceiling of £50,000, and it was only because the feelings of so many constituents of all Members of Parliament were that that was a completely disastrous policy that the Government were forced to change their mind? Does he agree that that completely undermined the City's faith in what the Government were originally setting out to do, which was to change PEPs and TESSAs?

Mr. St. Aubyn: My hon. Friend makes a valid point, which I was about to make myself. The implication is that, without the stout opposition of Conservative Members of Parliament, the Government would have got away with a mis-selling that would have put any other mis-selling in the shade. The Government promised in their manifesto that they would not jeopardise PEPs and TESSAs; yet, until we piled on the pressure, that is exactly what they proposed doing.
Many other hon. Members wish to speak, and I wish them to have full force. I therefore conclude by saying that a tax break was involved in PEPs and TESSAs, but it was available to those who were prepared to take responsibility for their own lives. In changing to the ISA, there is a suspicion—as pinpointed by The Economist—that, by putting a cap on new savings, far from trying to appeal to those who do not have the money to save anyway, the Government are attempting to attack the middle classes and their attempts to look after their own lives and to provide for their own futures.

Dr. Vincent Cable: When the concept of ISAs was introduced, my colleagues and I were complimentary about the vision of a large expansion of savings, which was initially envisaged as being from £6 million to £12 million. In the early stages of the discussion, the Government showed some willingness to


listen to criticism, and that is why we had the retreat on the lifetime savings question. However, as the details of the proposal have developed, there has been a growing scepticism—even among those of us who are well disposed to the idea—about how it will work in practice.
The first important issue is whether the proposal satisfies the problem of low-income savers. The Economic Secretary described the underlying reasons behind ISAs—that providing liquidity for low-income savers would encourage savings behaviour. All the research has shown that that is totally inadequate as an incentive for the low-income saver. Roughly 30 per cent. of households pay no tax and will derive no tax benefit from a scheme of this kind.
A more serious problem is the large number of people on very low incomes—who are in debt in many cases—and the many people who are in the benefits system. The Government have understood, particularly in relation to work, the extent and difficulty of the poverty trap: as people work more, they lose benefit and run into tax threshold problems, and there is a disincentive to work. The Government have begun to address those difficulties, but there is a similar poverty trap in relation to savings, as represented by the capital limits. The Government have shown no move so far to address that problem.
I recall addressing that point to the Paymaster General more than a year ago, and he promised us a comprehensive review of the savings trap for low-income savers. Nothing has been said about it. Judging by the development of Government policy—particularly the growth of means testing for the elderly—all the signs are that the poverty trap for low-income savers will become more, rather than less severe.
I hope that the Economic Secretary will tell us what the Government plan to do in parallel with ISAs to deal with the problem of savings for those who are not tax beneficiaries. That also links to the question of CAT marking. I have spent a lot of time talking to people who are in the specialist business of trying to market savings instruments to low-income savers. Pearl—a company that has a niche in that area—has been mentioned. The friendly societies also do so. Over and again, those providers of means of saving to low-income families say that, to do the job, they have to do it on a house-to-house basis. They collect regular, small-scale contributions and offer advice with their products. That cannot be done within the charges limits that the CAT system operates. It is a major disincentive, which is why the Economic Secretary to the Treasury will find that friendly societies will not offer CAT-marked ISAs. Perhaps, in her reply, the hon. Lady can summarise the evidence that she has received from that group of providers in response to her consultation.
CAT marking has been dealt with, but it is important to emphasise that many of the reservations about the principle have been expressed not merely by those who have a vested interest but by objective analysts. I do not know whether the Economic Secretary to the Treasury has seen the evidence supplied by the Consumers Association—a totally impartial body that caters particularly to middle and low-income savers. It makes the explicit point that, while it is a strong supporter of benchmarking and product rating, it is nervous about the idea of CAT-marking ISAs. It feels that awarding kite marks may lead to a false confidence on the part of consumers that ISAs are suitable for them at all times

and in all circumstances. The Government must reflect carefully, given the force of the objections from such bodies.
Finally, some of our growing reservations about the way in which the ISA system is being implemented concern its budgetary implications. Some time ago, we asked a City accountant, together with the House of Commons Library, to estimate what the change in the tax system would mean for the budget over the next five years. We came up with a global figure of about £3 billion to £5 billion in savings to the Treasury as a result of the shift from TESSAs and PEPs to ISAs. I want some sign from the Government as to their arithmetic. If there will be substantial savings, clearly the Government could respond to many of the concerns expressed in the debate. They could rescind the ceiling, for example, and provide more generous bounties to people at the low-income end of the savings bracket. It is important that we have confirmation from the Treasury of its estimate of the impact of the reform on total tax take.

Mr. Howard Flight: First, I must declare an interest as the chairman of an investment management business that offers PEPs.
When the Government announced their proposed changes, they made it clear that their key objective was to offer something that would be attractive to the less well off—to lower income groups. The Economic Secretary to the Treasury also argued that the new arrangements were not motivated by the desire to save the tax cost of the scheme and that they would be redistributive. However, the Green Paper made it abundantly clear that one of the key objectives was to stop the growing tax-loss cost of the old PEPs and TESSAS. Also, the new arrangements will be tax disadvantageous to those paying no income tax or the lowest rate after the loss of the 10 per cent. advance corporation tax refund in 2004.
I cannot understand how the new scheme will be the slightest bit attractive to those in low-income groups. The Economic Secretary argued that many people will use the cash ISA and that the old cash TESSA was unattractive because of the lock-in. We all know that it would not have been a problem to abolish the lock-in on the TESSA. That is a false argument and, if it is the sole argument on which the Government base their case, it is a pretty poor case.
The attitude of the industry has been illustrated in tonight's speeches. In the main, it is, "Let's get on with it. We've got to make it work. We've got to do the best." However, without party political prejudice, the industry in general regards ISAs as an inferior product to the old PEPs and TESSAs. The ISA has one advantage, which is the wider flexibility of equity investment. The rules on PEP equity investment—and for that matter on bond investment—had little logic.
I want to highlight some mechanical problems. The principal stupidity is that two different systems will run in parallel, with all the costs and problems that that will involve. Even the advantage of flexibility will be undone by the need for parallel vehicles to meet the PEP rules and the ISA rules. Client reporting will differ for ISA clients and PEP clients. Reporting to the Inland Revenue will also change, and that will add extra administration costs. The mini and maxi schemes are quite


incomprehensible to most of the industry. How on earth the Government can believe that someone passing through a supermarket will understand them, I simply cannot imagine. As has been said, virtually all supermarkets have made it clear that they will not offer ISAs, although the Government's key message was that supermarkets would sell ISAs.
I am greatly relieved that the Government have climbed down on their half-baked proposals to CAT-mark indexed schemes. That would have sent investors a most unwise message. As the pension trustees of the House of Commons pointed out to me recently, indexed investment is likely to perform less well in bad markets, although it may outperform in good markets. There are arguments both ways, but to favour one over the other would have been foolish.
I broadly welcome CAT-marking principles, if they merely show that a product is reasonably and fairly priced, and properly run. I have written to the Economic Secretary with a question, but I have received no reply in a month. The proposals for cash ISAs seem most peculiar in that they give deliberate advantage to large, cartelised banks and building societies. America has been successful in developing money funds to compete with banks and to improve people's returns. The CAT marks will apply to money ISAs in relation to the rates of interest that they will pay, not the charges. That means that only a bank or a building society will be able to provide a CAT-marked cash ISA. The Association of Unit Trusts and Investment Funds has confirmed that money funds—no matter how cheap and efficient—cannot qualify for CAT marking. Will the Economic Secretary clarify that point? If it is correct, it seems wrong in principle. A major objective should be competition with the banks, which will drive down their charges and drive up their competitiveness.
The change does not meet the Government's original targets. The Opposition want more and more people to own capital, not fewer and fewer. I should like to see a real fiscal incentive for those who have lower incomes. Perhaps some subsidisation would be appropriate if the Government mean what they said about increasing wide ownership of capital.

Ms Hewitt: With the leave of the House, Mr. Deputy Speaker, I shall reply to this interesting debate. Just as the president of the Confederation of British Industry yesterday dismissed the views of the shadow Chancellor on the public finances, so the savings industry does not share in the cynicism and nit picking that we have heard from the Opposition. The industry is getting on with making ISAs a success. Virgin Direct says that individual savings accounts combine the most attractive elements of personal equity plans and tax-exempt special savings accounts, and that CAT-marked ISAs are likely to have wide appeal. Midland bank says that the new scheme has features that will attract many new savers, particularly those with smaller amounts to invest. Fidelity says that 80 per cent. of its PEP and TESSA holders are considering investing in ISAs.
Some 200 managers are already approved by the Inland Revenue, a point raised by the hon. Member for Guildford (Mr. St. Aubyn). Another 100 have applied for a help visit from the Revenue. From April, ISAs will be available by phone and mail, through the internet and by personal application.
The hon. Member for Twickenham (Dr. Cable) raised the specific point about the savings disincentive, something that we are considering in the context of the pensions review. That is not an issue for that half of the population with savings below £200 for the simple reason that a means-tested benefit results in a savings disincentive—a benefit reduction—only if savings are £3,000 or more. It is obviously a concern for people, particularly elderly people, with savings at that level, but it is not an issue for those who have little or no savings.
With the help of consultation, we have achieved what we set out to do with ISAs and CAT standards, which is to overcome so many of the barriers that stand in the way of people who, at the moment, have little or no savings—the many not the few; the people who are of concern to Labour. They are the people who will particularly benefit from the new ISAs and CAT standard regime; they are the people whom the new regime is designed to assist.
As there have been some unfair implications this evening, I end by paying tribute to civil servants at the Treasury and the Inland Revenue who have worked so hard with the industry to ensure that the scheme will be the success that we believe it will. I hope that, in future debates on the subject, Conservative Members will join me in welcoming the extension of safe savings products to low-income and below-average-income savers and potential savers in Britain.

Mr. Gibb: This has been a short but important debate on the regulations which dismantle the PEP and TESSA reliefs and replace them with the inadequate ISA regimes.
Just to put the record straight, I do not receive any money from the Institute of Chartered Accountants; I pay it an annual membership fee.
We have heard an enormous amount of complacent language from the Economic Secretary. She insists that ISAs will attract more savers, yet refuses to give a target date for achieving the 6 million new savers. She talks about consultation, but it is clear from her response that she has not listened to people's concerns about complexity, cost and the lack of tax relief, and she is not even listening to me now.
My hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton), in a well-informed contribution to which the Economic Secretary would have done well to listen, pointed out that we now have an inferior savings scheme, introduced all in the name of producing a new scheme for the new Labour Government. He was right to point out that the 6 million target has somehow been dropped tonight on the road to 2 December.
My hon. Friend the Member for Guildford (Mr. St. Aubyn), in a short but high-quality contribution, talked about the highly successful TESSA and PEP schemes, which have added £60 billion to savings in Britain. The hon. Member for Twickenham (Dr. Cable), who is not in his place now, as he was not at the beginning


of the debate—[Interruption.] I apologise; he is present. He pointed out that people initially well disposed to ISAs have now become disillusioned with them. My hon. Friend the Member for Arundel and South Downs (Mr. Flight) rightly pointed out that a key motive in abolishing PEPs was to reduce the tax relief costs, which is what the Chief Secretary said in March.
Two months after coming to power, the Government began their assault on savings. A £5 billion a year tax on people's pension funds was followed a few months later by an announcement of the end of PEPs and TESSAs, which inflicted a colossal cost in reducing people's confidence in the continuity of tax incentives to save. The initial £50,000 lifetime limit and the retrospective element to the change in the reliefs caused people to believe that the savings regimes were no longer to be relied upon for the long term.
Long-term confidence is the key to a successful policy. The Government's savings policy has resulted in a huge drop in the savings ratio—from 10.5 per cent. when they came to office to 7.75 per cent. now. The Prime Minister claimed that 6 million new savers would result from ISAs, but the savings industry believes that ISAs are over-complex, expensive to administer and offer tax relief that barely covers the charges. ISAs are unattractive to non-taxpayers and to basic-rate taxpayers—the very people whom the Government claim to want to encourage. They are unattractive to supermarkets, insurance companies and the public.
Many people now believe that we should keep PEPs and TESSAs. Their abolition was an act of wanton vandalism that has damaged savings. I urge the Government to withdraw the regulations or, at the very least, delay them for a further year. That would give them time to put right the regulations, and industry time to upgrade their IT systems. In the meantime, I urge the House to vote against these badly thought-through regulations.

Question put:-

The House divided: Ayes 116, Noes 293.

Division No. 374]
[11.30 pm


AYES


Amess, David
Cormack, Sir Patrick


Ancram, Rt Hon Michael
Cran, James


Arbuthnot, Rt Hon James
Davies, Quentin (Grantham)


Atkinson, David (Bour'mth E)
Davis, Rt Hon David (Haltemprice)


Atkinson, Peter (Hexham)
Day, Stephen


Bercow, John
Dorrell, Rt Hon Stephen


Blunt, Crispin
Duncan Smith, Iain


Body, Sir Richard
Evans, Nigel


Boswell, Tim
Faber, David


Bottomley, Peter (Worthing W)
Fabricant, Michael


Brady, Graham
Flight, Howard


Brazier, Julian
Forth, Rt Hon Eric


Brooke, Rt Hon Peter
Fowler, Rt Hon Sir Norman


Browning, Mrs Angela
Fox, Dr Liam


Bruce, Ian (S Dorset)
Gale, Roger


Burns, Simon
Garnier, Edward


Butterfill, John
Gibb, Nick


Cash, William
Gill, Christopher


Chapman, Sir Sydney
Gillan, Mrs Cheryl


(Chipping Barnet)
Gorman, Mrs Teresa


Chope, Christopher
Green, Damian


Clappison, James
Greenway, John


Clifton-Brown, Geoffrey
Grieve, Dominic


Collins, Tim
Hague, Rt Hon William


Colvin, Michael
Hamilton, Rt Hon Sir Archie





Hammond, Philip
Paice, James


Hawkins, Nick
Paterson, Owen


Hayes, John
Pickles, Eric


Heald, Oliver
Randall, John


Heathcoat-Amory, Rt Hon David
Redwood, Rt Hon John


Hogg, Rt Hon Douglas
Robathan, Andrew


Horam, John
Robertson, Laurence (Tewk'b'ry)


Howarth, Gerald (Aldershot)
Rowe, Andrew (Faversham)


Hunter, Andrew
Ruffley, David


Jack, Rt Hon Michael
St Aubyn, Nick


Jackson, Robert (Wantage)
Sayeed, Jonathan


Jenkin, Bernard
Spring, Richard


Key, Robert
Stanley, Rt Hon Sir John


King, Rt Hon Tom (Bridgwater)
Streeter, Gary


Kirkbride, Miss Julie
Swayne, Desmond


Laing, Mrs Eleanor
Syms, Robert


Lait, Mrs Jacqui
Taylor, John M (Solihull)


Lansley, Andrew
Taylor, Sir Teddy


Leigh, Edward
Tredinnick, David


Letwin, Oliver
Trend, Michael


Lewis, Dr Julian (New Forest E)
Tyrie, Andrew


Lidington, David
Wardle, Charles


Lilley, Rt Hon Peter
Waterson, Nigel


Loughton, Tim
Wells, Bowen


Luff, Peter
Whitney, Sir Raymond


MacGregor, Rt Hon John
Whittingdale, John


MacKay, Rt Hon Andrew
Widdecombe, Rt Hon Miss Ann


Maples, John
Wilkinson, John


Maude, Rt Hon Francis
Wilshire, David


Mawhinney, Rt Hon Sir Brian
Winterton, Mrs Ann (Congleton)


May, Mrs Theresa
Woodward, Shaun


Moss, Malcolm
Young, Rt Hon Sir George


Nicholls, Patrick
Tellers for the Ayes:


Norman, Archie
Mrs. Caroline Spelman and


Page, Richard
Sir David Madel.


NOES


Adams, Mrs Irene (Paisley N)
Caplin, Ivor


Ainger, Nick
Casale, Roger


Alexander, Douglas
Caton, Martin


Allan, Richard
Chapman, Ben (Wirral S)


Allen, Graham
Chaytor, David


Anderson, Janet (Rossendale)
Clapham, Michael


Ashton, Joe
Clark, Rt Hon Dr David (S Shields)


Atherton, Ms Candy
Clark, Dr Lynda


Atkins, Charlotte
(Edinburgh Pentlands)


Baker, Norman
Clark, Paul (Gillingham)


Barnes, Harry
Clarke, Charles (Norwich S)


Barron, Kevin
Clarke, Rt Hon Tom (Coatbridge)


Battle, John
Clarke, Tony (Northampton S)


Beard, Nigel
Clelland, David


Beckett, Rt Hon Mrs Margaret
Clwyd, Ann


Benn, Rt Hon Tony
Coaker, Vernon


Benton, Joe
Coffey, Ms Ann


Bermingham, Gerald
Coleman, Iain


Berry, Roger
Connarty, Michael


Best, Harold
Cooper, Yvette


Blackman, Liz
Corbett, Robin


Blizzard, Bob
Corbyn, Jeremy


Boateng, Paul
Corston, Ms Jean


Borrow, David
Cox, Tom


Bradley, Keith (Withington)
Cranston, Ross


Bradley, Peter (The Wrekin)
Crausby, David


Bradshaw, Ben
Cryer, Mrs Ann (Keighley)


Brinton, Mrs Helen
Cummings, John


Browne, Desmond
Cunliffe, Lawrence


Buck, Ms Karen
Cunningham, Jim (Cov'try S)


Burgon, Colin
Curtis-Thomas, Mrs Claire


Butler, Mrs Christine
Darvill, Keith


Cable, Dr Vincent
Davey, Valerie (Bristol W)


Caborn, Richard
Davidson, Ian


Campbell, Alan (Tynemouth)
Davies, Rt Hon Denzil (Llanelli)


Campbell, Mrs Anne (C'bridge)
Davies, Geraint (Croydon C)


Campbell-Savours, Dale
Dawson, Hilton


Cann, Jamie
Dewar, Rt Hon Donald






Donohoe, Brian H
Keen, Alan (Feltham & Heston)


Dowd, Jim
Keetch, Paul


Drew, David
Kemp, Fraser


Drown, Ms Julia
Kennedy, Jane (Wavertree)


Eagle, Maria (L'pool Garston)
Khabra, Piara S


Edwards, Huw
Kidney, David


Efford, Clive
Kilfoyle, Peter


Ellman, Mrs Louise
King, Andy (Rugby & Kenilworth)


Ennis, Jeff
King, Ms Oona (Bethnal Green)


Etherington, Bill
Kingham, Ms Tess


Ewing, Mrs Margaret
Kumar, Dr Ashok


Fisher, Mark
Ladyman, Dr Stephen


Fitzsimons, Lorna
Lawrence, Ms Jackie


Flint, Caroline
Laxton, Bob


Flynn, Paul
Lepper, David


Foster, Rt Hon Derek
Leslie, Christopher


Foster, Don (Bath)
Levitt, Tom


Foster, Michael J (Worcester)
Lewis, Ivan (Bury S)


Foulkes, George
Lewis, Terry (Worsley)


Fyfe, Maria
Linton, Martin


Galloway, George
Lloyd, Tony (Manchester C)


Gardiner, Barry
Llwyd, Elfyn


Gibson, Dr Ian
Lock, David


Gilroy, Mrs Linda
Love, Andrew


Godman, Dr Norman A
McAllion, John


Godsiff, Roger
McAvoy, Thomas


Goggins, Paul
McCabe, Steve


Golding, Mrs Llin
McCafferty, Ms Chris


Gordon, Mrs Eileen
McDonagh, Siobhain


Griffiths, Jane (Reading E)
McDonnell, John


Griffiths, Nigel (Edinburgh S)
McGuire, Mrs Anne


Griffiths, Win (Bridgend)
McIsaac, Shona


Grogan, John
McNamara, Kevin


Hain, Peter
MacShane, Denis


Hall, Mike (Weaver Vale)
McWalter, Tony


Hall, Patrick (Bedford)
McWilliam, John


Hamilton, Fabian (Leeds NE)
Mallaber, Judy


Hanson, David
Mandelson, Rt Hon Peter


Healey, John
Marek, Dr John


Henderson, Ivan (Harwich)
Marsden, Gordon (Blackpool S)


Hepburn, Stephen
Marshall, Jim (Leicester S)


Heppell, John
Marshall-Andrews, Robert


Hesford, Stephen
Martlew, Eric


Hewitt, Ms Patricia
Maxton, John


Hill, Keith
Michie, Bill (Shefld Heeley)


Hinchliffe, David
Miller, Andrew


Hoey, Kate
Mitchell, Austin


Home Robertson, John
Moffatt, Laura


Hoon, Geoffrey
Moran, Ms Margaret


Hopkins, Kelvin
Morgan, Ms Julie (Cardiff N)


Howarth, George (Knowsley N)
Morgan, Rhodri (Cardiff W)


Howells, Dr Kim
Morley, Elliot


Hoyle, Lindsay
Morris, Ms Estelle (B'ham Yardley)


Hughes, Ms Beverley (Stretford)
Mullin, Chris


Humble, Mrs Joan
Murphy, Denis (Wansbeck)


Hurst, Alan
Naysmith, Dr Doug


Hutton, John
O'Brien, Bill (Normanton)


Iddon, Dr Brian
O'Brien, Mike (N Warks)


Illsley, Eric
O'Hara, Eddie


Jackson, Ms Glenda (Hampstead)
Olner, Bill


Jackson, Helen (Hillsborough)
Palmer, Dr Nick


Jamieson, David
Perham, Ms Linda


Jenkins, Brian
Pickthall, Colin


Johnson, Alan (Hull W & Hessle)
Pike, Peter L


Johnson, Miss Melanie
Plaskitt, James


(Welwyn Hatfield)
Pollard, Kerry


Jones, Barry (Alyn & Deeside)
Pond, Chris


Jones, Mrs Fiona (Newark)
Pope, Greg


Jones, Helen (Warrington N)
Pound, Stephen


Jones, Ms Jenny
Prentice, Gordon (Pendle)


(Wolverh'ton SW)
Primarolo, Dawn


Jones, Jon Owen (Cardiff C)
Prosser, Gwyn


Jones, Dr Lynne (Selly Oak)
Purchase, Ken


Jones, Martyn (Clwyd S)
Quin, Ms Joyce


Kaufman, Rt Hon Gerald
Quinn, Lawrie


Keeble, Ms Sally
Radice, Giles





Rammell, Bill
Stuart, Ms Gisela


Rapson, Syd
Stunell, Andrew


Reed, Andrew (Loughborough)
Sutcliffe, Gerry


Rendel, David
Taylor, Rt Hon Mrs Ann


Roche, Mrs Barbara
(Dewsbury)


Rooney, Terry
Taylor, Ms Dari (Stockton S)


Ross, Ernie (Dundee W)
Thomas, Gareth (Clwyd W)


Rowlands, Ted
Thomas, Gareth R (Harrow W)


Roy, Frank
Timms, Stephen


Ruane, Chris
Tipping, Paddy


Russell, Bob (Colchester)
Touhig, Don


Russell, Ms Christine (Chester)
Truswell, Paul


Ryan, Ms Joan
Turner, Dennis (Wolverh'ton SE)


Salter, Martin
Twigg, Stephen (Enfield)


Savidge, Malcolm
Vaz, Keith


Sawford, Phil
Ward, Ms Claire


Sedgemore, Brian
Wareing, Robert N


Sheerman, Barry
Watts, David


Shipley, Ms Debra
Webb, Steve


Simpson, Alan (Nottingham S)
White, Brian


Skinner, Dennis
Whitehead, Dr Alan


Smith, Rt Hon Andrew (Oxford E)
Williams, Alan W (E Carmarthen)


Smith, Jacqui (Redditch)
Willis, Phil


Smith, Llew (Blaenau Gwent)
Wilson, Brian


Snape, Peter
Winnick, David


Soley, Clive
Winterton, Ms Rosie (Doncaster C)


Southworth, Ms Helen
Wise, Audrey


Spellar, John
Wood, Mike


Starkey, Dr Phyllis
Woolas, Phil


Steinberg, Gerry
Worthington, Tony


Stevenson, George
Wray, James


Stewart, David (Inverness E)
Wright, Anthony D (Gt Yarmouth)


Stewart, Ian (Eccles)
Wright, Dr Tony (Cannock)


Stoate, Dr Howard
Tellers for the Noes:


Strang, Rt Hon Dr Gavin
Mr. Kevin Hughes and


Stringer, Graham
Mr. Robert Ainsworth.

Question accordingly negatived.

Orders of the Day — DELEGATED LEGISLATION

Mr. Deputy Speaker (Mr. Michael J. Martin): With permission, I shall put together the motions relating to delegated legislation.

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

AGRICULTURE

That the draft Meat and Livestock Commission Levy (Variation) Scheme (Confirmation) Order 1998, which was laid before this House on 21st July, be approved.

NORTHERN IRELAND

That the draft Local Government (Amendment) (Northern Ireland) Order 1998, which was laid before this House on 21st July, be approved.
That the draft Health and Safety at Work (Amendment) (Northern Ireland) Order 1998, which was laid before this House on 23rd July, be approved.—[Mr. Hanson.]

Question agreed to.

Orders of the Day — EUROPEAN COMMUNITY DOCUMENTS

Motion made, and Question put forthwith, pursuant to Standing Order No. 119(9) (European Standing Committees),

SOCIAL ACTION PROGRAMME (1998–2000)

That this House takes note of European Community Document No. 8238/98, a Commission Communication on its proposed Social Action Programme for 1998–2000; supports the Government's view that the Programme rightly places jobs at the heart of its framework for action; and also supports the Government's intention to give due consideration to specific Commission proposals as they come forward.—[Mr. Hanson.]

Question agreed to.

Orders of the Day — DELEGATED LEGISLATION

Mr. Deputy Speaker (Mr. Michael J. Martin): With permission, I shall put together the motions relating to delegated legislation.

Ordered.

ENVIRONMENTAL ASSESSMENT

That the Environmental Assessment (Forestry) Regulations 1998 (S.I., 1998, No. 1731), dated 21st July 1998, a copy of which was laid before this House on 23rd July, be referred to a Standing Committee on Delegated Legislation.

CATTLE DATABASE

That the Cattle Database Regulations 1998 (S.I., 1998, No. 1796), dated 20th July 1998, a copy of which was laid before this House on 27th July, be referred to a Standing Committee on Delegated Legislation.—[Mr. Hanson.]

Orders of the Day — Paul Edwards

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hanson.]

Mr. Nigel Waterson: I begin by welcoming the Minister to his new role. I am grateful for the opportunity to highlight the problems faced by my constituent, Margaret Edwards, and others, who, as lone carers, work hard to look after their disabled children at home. Paul Edwards is totally immobile, and suffers from severe cerebral palsy and epilepsy. He requires constant care. Margaret has devoted a large part of her adult life to caring for him, and has sought available assistance by presenting the compelling facts connected with Paul's needs, rather than merely complaining about the very difficult situation that she and Paul face daily.
I think that we would all accept that the birth of a child lays a responsibility on the parents. Equally, it can be easily accepted that, if a child is severely disabled, the parent's responsibilities become much harder to meet. How much more must that be so in the case of a parent who has to care for a disabled child alone.
Margaret Edwards's plight, sadly, is not unique; but it is true that many people in her position might feel, with some justice, that they could not avoid putting their child into some form of permanent institutional care. Margaret Edwards has resisted that option throughout the 19 years for which she has cared for her son, but circumstances have made her choice increasingly unsustainable. I have been doing what I can to assist Margaret and Paul since I entered the House, and have seen at first hand the tremendous efforts that Paul's mother has made to offer him something approaching a normal existence.
At every stage, Paul's mother has made great efforts, on her own, to keep Paul at home and to give him proper care. I corresponded with Motability, and, although progress was made, Margaret Edwards sacrificed her existing car, which meant that she could no longer collect friends to see her and Paul, and took out a loan to purchase a vehicle capable of taking a wheelchair and occupant without transfer. She could only afford an older vehicle, and it has generated its own costs and problems. We worked together to seek timely assistance from the local social services department, and I pay tribute to the devoted staff there.
By the time Paul was 16, he weighed the same as his mother—nine stone—and Margaret Edwards found it increasingly difficult to deal with the average number of 33 lifts that were required each day to cater for Paul's needs. Special adaptations have been made to Paul's home, but it has always taken time, and carers like Margaret find it increasingly difficult to wait—sometimes for years—for practical support of that kind.
I am keen for the House to consider the plight of my constituent, not least because—as Margaret has acknowledged—she is not in a unique situation. We know that many families are held together by the largely unsung work of carers. The Carers National Association has advised me that there are an estimated 5.7 million carers throughout the United Kingdom—about one in eight people. The majority of those carers provide limited assistance, but some 1.7 million provide 20 hours of care or more a week.


To highlight the position of Margaret Edwards, it is worth recording that the number of carers who care single-handedly has increased over the past few years, and that more than a third of carers carry out their task without outside help. As I have said, there are a considerable number of lone carers, and they deserve our special attention.
Paul is now 19, and has left school. Although his school years were also difficult for his mother—especially during the long holidays—the problems, particularly financial, have worsened considerably since Paul entered adulthood. It is likely that, if he were not severely disabled, he would be preparing to leave home and make his way in the world; his mother would be able to take up full-time employment again, if she wished, and broaden the scope of her life with new pastimes and a wider circle of friends. All that is denied to both Paul and his mother.
Although Paul attended a day centre, its working hours are less than normal school hours. Margaret Edwards found herself in a grim "Catch 22" situation. Because of her caring role and the fact that Paul will never be able to support himself, she was unable to work enough hours to earn enough to be fully independent and get off income support. Indeed, when she had to have an operation and go into hospital, and was thereafter recuperating, after four weeks her benefits were stopped, and her income was reduced to £40 a week. She also discovered that she was not entitled to respite care for the ensuing two years.
In the past, the Government have expressed their desire to review the social security system, with specific regard to provision for disabled people and their carers. Unfortunately, my correspondence with the Department of Social Security and others on Margaret Edwards's behalf leaves me concerned that the special problems experienced by lone carers may be overlooked. Indeed, a number of ministerial answers contain suggestions that go very little way towards appreciating, let alone addressing, the needs of lone carers.
One suggestion was that Paul might benefit from the social fund towards one-off expenses that he might need to meet. Most expenses that are associated with Paul's care are certainly not one-off. Carpets must be replaced frequently, and special bedroom and bathroom equipment purchased, most of which will probably have a definite life span.
One of Paul's particular needs was for an adjustable bed. His mother approached the social fund for support. I am glad to say that help was forthcoming, but Margaret was told that the fund did not normally provide finance for such equipment, and certainly not for items costing more than around £500; it is worth noting that specialist care equipment is very expensive, and physical adaptations will often be required to the carer's home to ensure that it is safely installed.
However, what carers mainly want is not charitable handouts, although any help is appreciated. Rather, lone carers such as Paul's mother would prefer to have a benefit and tax system that supported them in their desire to seek employment, where possible, and to lead normal, or near to normal, lives, while at the same time maintaining responsibility for their dependent relative.
Carers relieve the state and the rest of society of much cost and responsibility: the state is saved an estimated £34 billion a year as a result. A recent study by London

Economics found that small changes in the number of carers could have a profound economic effect. The same study found that, with increasing opportunity costs of caring, fewer people were likely to care, but we all have a responsibility to people such as Margaret Edwards, who give up their lives to care full time for disabled and sick relatives.
Returning to the suggestion that applications to the social fund, for example, address anything other than limited short-term needs, I quote from a letter sent to me by Margaret Edwards:
As for applying to the Social Fund each time Paul or I need `extras' for the home, this is precisely the point carers are trying to make, and which the Government continue to fail to understand. We are NOT unemployed people, and do not want to spend the rest of our lives living off charity. We want to be given full recognition, with a recognised wage, consistent with the work we do, and the actual costs of our disabled relative's needs and cost of special equipment, as well as our quality of life (or rather lack of it!)
Lone carers such as Margaret face additional problems, which are faced by anyone dealing with a difficult domestic situation on their own. As I have described, she literally cannot afford to fall ill, or fail in her commitment to Paul. It will no doubt be said that schemes of respite care are available that should enable Paul to receive adequate care while his mother takes a break, but the reality, certainly in East Sussex, is that respite care centres are often called on to deal with admissions, perhaps in the mental health sector, which cause a shortage of space for people such as Paul, and may create an unsuitable environment for young disabled people.
Respite care that might be available only once every few weeks is not sufficient to give Margaret Edwards the support she needs. In her case, the weekend placement had at least once to be cancelled without notice because of a problem involving another client at the respite care home.
It appears that, although carers as a whole deserve increased support, the position of lone carers vis-a-vis couples does discriminate against the former. The earnings limit for single carers on income support and invalid care allowance should be the same as that for married or partner carers who are not in receipt of income support, but do receive invalid care allowance.
I am frankly humbled by the fortitude and hard work that is shown by carers such as Margaret Edwards. We must remember that such carers relieve society of an enormous administrative and financial burden. Such carers do not seek rewards—merely the tools to do the job that they often willingly take on for themselves and their loved one.
What should be done to help? The Department of Health has talked about a national strategy for carers as part of a broader assessment of the working relationship between health and social services. Such a strategy, if properly resourced, would enjoy wide support among carers and hon. Members on both sides of the House. Lone carers' particular difficulties should be considered at the outset of any such policy discussions. I look forward to hearing from the Minister that any public consultation arising in this sector would be as thorough and wide-ranging as possible.
Such a strategy would add little to the lives of people like Margaret and Paul Edwards unless it sought to focus resources more closely towards areas of need, and


succeeded, for example, in cutting the average waiting time for special care equipment such as beds and commodes. Such a strategy should also address the need for greater co-ordination between the agencies and professionals with whom both carers and cared for have to deal. That could help further focus resources towards those most in need.
The psychological costs of caring must be reduced by increasing the number of short-term breaks for carers, ensuring that less time is spent organising care, by having more seamless support systems and easier access to that support and improving benefits for carers. The whole question of financial support for carers should be examined. Put more appropriately, the current financial disincentive to be a carer, particularly a lone one such as Margaret Edwards, must be addressed. Margaret Edwards says:
I feel particular notice should be given to the differences between a lone carer and a family where there is a full-time wage earner as well as the main carer. Almost all of my problems could have been resolved far quicker. and with much less stress, had I not been so dependent upon the current social security system.
My constituent wanted to help herself and care for her son. Let us help to make that hard task easier, and so acknowledge in an appropriate way the great sacrifices made by all carers.
Sadly, any new steps taken to create a carers network or to focus more clearly on the inequitable position of lone carers will come too late for Margaret and Paul Edwards. In a letter dated Monday this week, Margaret tells me that, because of her own poor state of health, she has been forced to take the step that she has fought for so long to avoid—she has had to put Paul into a residential home. As she put it so poignantly:
I am being very cruel to him, in trying to keep him at home. I just do not have the money to give him a life outside these four walls. From when he comes home from the day centre, he becomes a prisoner in his own home.
Because of the lack of suitable local facilities, Margaret will face an 86-mile round trip to see Paul, and is already worrying about the costs involved. Margaret's feelings of helplessness are summed up clearly when she says:
'Normal' children are able to visit their parents from time to time. For Paul and I this is not an option. They also have the knowledge that their children are capable of letting them know how they are. I will still have all the emotional trauma that will undoubtedly be there, not knowing if he is being cared for properly, and the knowledge that he is unable to inform me of his feelings. In short, I have to put my complete trust in his carers.
All Margaret Edwards and other carers want is adequate recognition for the work they do and the necessary support to carry out their labour of love. Lone parents deserve our particular support, and I ask the Minister, on behalf of Margaret and Paul and many others, for that support.

The Parliamentary Under-Secretary of State for Health (Mr. John Hutton): I congratulate the hon. Member for Eastbourne (Mr. Waterson) on his success in securing time to debate this very important subject. I am particularly grateful for his kind words of welcome at the beginning of his thoughtful and constructive speech.
The Government value the role that carers play. We recognise that they play an important part in the fabric of our society. One in eight adults gives informal

care and one in six homes has a carer. As the hon. Gentleman correctly said, that means that there are nearly 6 million carers in the United Kingdom today
Carers fulfil a vital role in helping relatives or friends and, without their support, many disabled or elderly people would lose the chance to stay in their own homes or with their own families. Caring is something that touches us all. Most of us will have had some experience, either in our own family, or through friends or colleagues, of illness and disability. We therefore know some of the difficult decisions families face and can appreciate the great responsibilities that carers like Margaret Edwards undertake over long periods of time.
On a number of occasions, the hon. Member for Eastbourne referred specifically to the circumstances in which his constituents, Margaret and Paul Edwards, find themselves. It might be helpful if I make one or two remarks about the case to which he has drawn our attention.
East Sussex social services department has agreed a substantial package of support services for Paul and his mother. As the hon. Gentleman said, the services include attendance five days a week at a day service centre, three nights a week of respite care, a Crossroads sitting service and domiciliary care provided in response to requests from Mrs. Edwards. A social worker has been allocated to the family, who I think has—I stand to be corrected by the hon. Gentleman—developed a very good working relationship with the Edwards family.
Equipment has been provided and adaptations have been made to allow Paul to live at home. He has a wheelchair and a specially contoured bed, and ceiling tracks have been provided to lift him in and out of bed. An application by Mrs. Edwards to extend that system to the bathroom, to replace the hoist currently in use, is being considered by the social services department.
The examples that I have given show that the East Sussex social services department has already provided a range of help to Paul and to Margaret, and 1 am sure that the department will continue to consider sympathetically any additional requests for help from them.
Most people do not plan to be carers. Moreover, many people who provide care regard themselves not as carers but simply as people providing the love and comfort that comes naturally to them. It is a role that arises from mutual bonds of family, duty and affection, sometimes at significant personal cost to carers themselves.
In recognising the contribution of carers, we should not ignore the fact that families and carers can sometimes feel over-burdened, unaided and unsupported in their task. Government and statutory agencies clearly have a responsibility to listen to carers and ensure that the right support is available for them at the right time. That is why, on 10 June 1998, my right hon. Friend the Prime Minister announced that he was asking the then Under-Secretary of State for Health, my hon. Friend the Member for Brent, South (Mr. Boateng) to lead a Government-wide review of measures to help carers as part of a national strategy for carers.
The objective of the national strategy is to bring together a range of initiatives designed to address carers' concerns and to give them support. The strategy's terms of reference include drawing together existing work within government that impacts on carers; taking account


of the emerging findings of the royal commission on long-term care; and assessing whether any key needs have been overlooked.
The hon. Member for Eastbourne has raised the issue of social security benefits and of how the rules and regulations concerning those benefits impact on the lives of carers. I shall specifically address those issues in a moment. First, however, I should like to reassure the hon. Gentleman that we wish to ensure that there is across Government an integrated approach to carers. The strategy is building on work that has already been done in the past 18 months to strengthen links between Departments on carers' issues and is also maintaining a meaningful dialogue with carers' organisations.
I was concerned at parts of the hon. Gentleman's speech, when he seemed to imply that all the problems that carers are now experiencing date from 1 May 1997. They do not. The previous Government had 18 years to deal with some of carers' particularly pressing concerns, and conspicuously failed to do so. On 1 May 1997, the new Government began to start addressing those issues.
The national strategy for carers is built around ensuring that carers' concerns are no longer ignored. Our approach is both inclusive and flexible. The Government are involving in our work on the issue carers' organisations, carers themselves, recipients of care, representatives of the statutory services, various Departments and people from industry and commerce.
On 30 July, my hon. Friend the then Under-Secretary of State chaired a meeting of Ministers from Departments with an interest in meeting carers' needs. That was the first ministerial meeting ever held specifically on carers' needs. Ministers decided that, within the strategy, work will be undertaken on four specific themes: respitex2014;to which the hon. Member for Eastbourne referred; employment issues; community networks; and meeting health needs.
Working groups to examine each of the four themes have now been established and have all met at least once. The groups each include representatives from key stakeholder groups. Additionally, however—to capture the views of an even wider range of people—next week, there will be in London a full-day UK consultative conference at which we shall discuss how the needs of carers might be better met. Those invited include Ministers and other representatives from both this House and the other place; people from both national and local carers' organisations; representatives of local government; industry and commerce; representatives of religious and ethnic minority groups; and—most important of all—individual carers who have written to tell us about the issues that concern them most.
I deal now with social security benefits and the national carers strategy. The strategy will be taking a critical look at all aspects of invalid care allowance and the other benefits that support carers in their valuable role. We will want to see what is currently available, how well the benefits meet the needs of carers and what changes may be appropriate for the future. It is too early to say what the results of that examination will be, but we expect to include any proposals in the strategy's consultation document. I assure the hon. Gentleman that that consultation process will be wide and meaningful.
Nevertheless, social security benefits already make a substantial contribution, whether directly or indirectly, towards informal care. As well as specific provision for carers in their own right through invalid care allowance—which will, incidentally, exceed £830 million in 1998–99, topped up, for those less well off, with income-related benefits—in excess of £24 billion goes towards the income replacement and extra costs needs of long-term sick and disabled people.
Despite that level of spending, there are undoubtedly unmet needs. That is why my right hon. Friend the Secretary of State for Social Security recently announced the latest stages of the process of reforming the welfare state. The Government are determined to help disabled people, and, by extension, those who care for them, especially where the carer and the cared for live in the same home, as is the case with the Edwards family.
We want to help disabled people get back into work. To achieve that, we have announced our intention to modernise incapacity benefit, so that it provides information on what people can do, not what they cannot do, and to help people plan their return to work.
We also intend to introduce a single work-focused gateway. It will help sick and disabled people and their carers consider opportunities for work through personal advisers and a common entry point for all benefits. That will help to improve the service that we give our clients and help them avoid benefit dependency. At the moment, too many claimants experience duplication and confusion. We need to tailor our services to provide a more personalised and professional service and seek to help people become more independent. Obviously, if a carer's duties are particularly onerous, an immediate focus on work would be inappropriate, but we do not intend that people will lose access to their personal adviser.
Also, we are going to provide security for those disabled people who cannot work. We will focus that help on those in the greatest need by introducing the disability income guarantee—a new increase in income support for those severely disabled adults and children with the greatest needs. We expect that some 145,000 adults and 25,000 children will benefit from the disability income guarantee from April 2001. We shall also be reforming the severe disablement allowance so that it provides greater help to those who become disabled early in life, and we shall be extending to children aged three and four the higher rate mobility component of the disability living allowance.
In conclusion, the strategy will be ready for consultation early in 1999. We already know from the research available to us and from the many letters that people send us that carers' main needs are the means to have a break, recognition of the importance of their role, reliable and satisfactory services, relief from social isolation, and information.
I thank the hon. Gentleman for raising some very important issues, both for carers and for those whom they care, and for the constructive tone of many of his remarks. I assure him that his views will be fed into the strategy process. If we, as a Government, can help to meet the needs of carers, then we shall have succeeded in making a very important contribution to improving the quality of life of many of our citizens.

Question put and agreed to.

Adjourned accordingly at eight minutes past Twelve o'clock.